Symptoms
In the Program Neighborhood client, the logon method for the application set is set to Smart card and the Pass-through authentication check box is selected.

When the application set is enumerated, the applications are enumerated without the need to enter a PIN. This is expected. However, the following error message appears when launching the application:
"The system could not log you on. An incorrect PIN was presented to the smart card"
After clicking OK, a PIN prompt appears. The application launches after entering the PIN. There should not be a second PIN prompt if Pass-through authentication is enabled.
Resolution
The user is not logged on to the client PC/Device using the smart card. This is a prerequisite.
If the user logs on with Windows credentials and attempts to use the smart card with Single Sign-on (SSO) the error described above occurs.
More Information
When logging on to a system using a smart card and setting the Program Neighborhood client to use SSO with smart cards, there is no PIN prompt when enumerating the applications. There is also no PIN prompt when launching any application.
When logging on to a system with Windows authentication and setting the Program Neighborhood client to use SSO with a smart card, the scenario described in the Symptoms section occurs.