When attempting to access a remote 2008 server from the SMSMSE console a box pops up requesting credentials, and anything supplied is rejected with the response "The request failed with HTTP status 401: Unauthorized."
IIS authentication roles not installed on the target server
Install the IIS authentication roles, Basic Authentication, Windows Authentication, and Digest Authentication, and reboot the target server.
These can be located in the Server manager under Roles -> Web Server (IIS).
Steps to install IIS authentication roles:
In order for the SMSMSE website to process the credentials supplied by the console machine, it must have a mechanism to receive credentials. Without the authentication roles installed, all connection attempts to the website as treated as 'Guest' and denied access.