This event may also occur if you have "Reconnect if connection is dropped" checked on the client, and have "always prompt for password" checked under the logon settings tab on the terminal servers RDP properties.
This issue might occur when the client computer tries to reestablish the remote session with the terminal server after a temporary network interruption and is unable to authenticate with the terminal server. This could happen because the information passed between the client computer and the terminal server to reestablish the connection has become corrupted. See the link to "Autoreconnect Failure: Event ID 1041" for information on how to solve this problem.