SSPI handshake failed with error code 0x8009030C while establishing a connection with integrated security. Event ID 17806 »

Fix for Login failed for user “. The user is not associated with a trusted SQL Server Connection.

This article provides a fix for the error:
Login failed for user “. The user is not associated with a trusted SQL Server Connection. (CLIENT: 127.0.0.1)
This error has several causes- one of which is an application or ODBC connection that is initiated from the same machine as the SQL server (ie the server is connecting to itself). The easiest fix for this is to temporarily or permanently disable the loopback check ….

1. Edit the registry using regedit.  (start –> run … Regedit <Enter>)
2. Browse to :  HKLM\System\CurrentControlSet\Control\LSA
3. Add a DWORD value called “DisableLoopbackCheck”
4. Set this value to 1

You should now find that the connection will complete successfully.  Another place to check is in event viewer.   For this particular error we had 3 events logged in event viewer:
1. Failure Audit :: Login Failed for user ‘<DOMAIN>\<USERNAME>’. (CLIENT 127.0.0.1)
2. Error :: SSPI handshake failed with error code 0x8009030C while establishing a connection with integrated security; the connection has been closed. (CLIENT 127.0.0.1)
3. Failure Audit :: Login Failed for user “. (CLIENT 127.0.0.1)
The above steps resolve this issue.
Below is an article that discusses in more detail disabling the loopback check.
http://support.microsoft.com/kb/896861