The connection cannot proceed because authentication is not enabled and the remote computer requires that authentication be enabled to connect.
This error occurs when you try to establish a remote connection from a Windows Server 2008R1 to a Windows Server 2016. In modern versions of Windows, like Windows 10 or Windows Server 2016, the RDP defaults have changed. The default for the Security Layer has changed from 0 to 2.
In the RDP session check mark Activate network level authentication than OK.
Remote Desktop Manager Activate network level authentication
To resolve this issue, on the Windows Server 2016, open the registry (regedit.exe) and navigate to: HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\TerminalServer\WinStations\RDP-Tcp. Then, change the SecurityLayer to 0.