Virtual Delivery Agents with VDA 7.x installed and the Remote Desktop Session Host Configuration Policy “Always prompt for password upon connection” enabled will prompt for a password upon connection to the VDA.

Background

The Virtual Delivery Agent (VDA) shipped with XenDesktop 7 features a multi-user ICA stack, which extends Remote Desktop Services with the HDX Protocol.

When the following policy is enabled in the MMC or gpedit.msc, the Windows VDA will prompt the user for a password:

Computer Configuration – Policies – Administrative Templates – Windows Components – Remotes Desktop Services – Remote Desktop Session Host – Security – Always prompt for password upon connection
 

When the VDA was designed, it was decided that because of the close coupling with Remote Desktop Services that having a separate Citrix Policy to the already existing Microsoft policy added unnecessary redundancy to the policies. So it was decided to honor the Microsoft Remote Desktop Services Policy.

Note: This behavior is expected and by-design.

Additional Information

Microsoft Technet -  Always prompt for password upon connection is not working as expected