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The client and server are using Active Directory - when connecting using Remote Desktop, "Your Windows logon credentials will be used to connect" is shown but the login screen is still being shown. Re-entering credentials logs the user in but then there is no SSO experience. What could be the cause?
The group policy to "Allow Delegating Default Credentials" is enabled on the client for "TERMSRV/*.mydomain.com".
The fix was to change group policy:
Computer Configuration\Administrative Templates\Windows Components\Remote Desktop Services\Remote Desktop Session Host\Security
Require use of specific security layer for remote (RDP) connections - switched from "RDP" to "Not configured"
