If you install Windows SharePoint Services SP2, you may receive a TF31002 (Unable to connect) error. This is because SP2 disables NTLM authentication on the default site virtual server in favor of using Kerberos authentication.
To use a script to enable NTLM authentication on the virtual server, follow these steps:
cscript adsutil.vbs get w3svc/1/NTAuthenticationProviders
Note The virtual server ID number of the Default Web site in IIS is 1.
cscript adsutil.vbs set w3svc/1/NTAuthenticationProviders "NTLM"
For more information, see this KB article: http://support.microsoft.com/?id=832769