RADIUS authentication MSM410

[Wishmaster84]

We are trying to setup Radius authentication on the MSM410 using WPA2(AES/CCMP). We installed a Windows 2008 NPS server and setup the AP as an radius client and setup a network policy containing NAS Port type: Wireless - Other OR wireless - IEEE 802.11 and Windows Groups

The Authentication method is setup:

- PEAP with MS-CHAP-v2 and MS-CHAP enabled

Also I've setup the clients to use PEAP when connecting to the WIFI network. However I'm not getting authenticated. I keep getting the error message:

    Reason Code:            266
    Reason:                The message received was unexpected or badly formatted.

I can confirm the RADIUS server is working, when I go to management in the MSM410, choose RADIUS authentication and test it, if successfully authenticates.

Any help would be very appreciated.