Updating hybrid configuration failed - Kerberos authentication: The network path was not found

Question

I'm configuring Exchange 2010 SP3 as a Hybrid server with Exchange Online. This is a single server running Exchange roles Mailbox, Client Access, Unified Messaging and Hub Transport.
When I run the Manage Hybrid Configuration, I receive the following error:
Updating hybrid configuration failed with error
'System.Management.Automation.Remoting.PSRemotingTransportException: Connecting to remote server failed with the following error message : WinRM cannot process the request. The following error occurred while using Kerberos authentication: The network
path was not found.
The full text from the Hybrid Configuration log file (C:\Program Files\Microsoft\Exchange Server\V14\Logging\Update-HybridConfiguration)
[1/5/2014 21:21:1] INFO:Opening runspace to
http://[servername]/powershell?serializationLevel=Full
[1/5/2014 21:21:1] INFO:Disconnected from On-Premises session
[1/5/2014 21:21:1] ERROR:Updating hybrid configuration failed with error 'System.Management.Automation.Remoting.PSRemotingTransportException: Connecting to remote server failed with the following error message : WinRM cannot process the request. The following
error occured while using Kerberos authentication: The network path was not found. 
 Possible causes are:
  -The user name or password specified are invalid.
  -Kerberos is used when no authentication method and no user name are specified.
  -Kerberos accepts domain user names, but not local user names.
  -The Service Principal Name (SPN) for the remote computer name and port does not exist.
  -The client and remote computers are in different domains and there is no trust between the two domains.
 After checking for the above issues, try the following:
  -Check the Event Viewer for events related to authentication.
  -Change the authentication method; add the destination computer to the WinRM TrustedHosts configuration setting or use HTTPS transport.
 Note that computers in the TrustedHosts list might not be authenticated.
   -For more information about WinRM configuration, run the following command: winrm help config. For more information, see the about_Remote_Troubleshooting Help topic.
   at System.Management.Automation.Runspaces.AsyncResult.EndInvoke()
   at System.Management.Automation.Runspaces.Internal.RunspacePoolInternal.EndOpen(IAsyncResult asyncResult)
   at System.Management.Automation.Runspaces.RunspacePool.Open()
   at System.Management.Automation.RemoteRunspace.Open()
   at Microsoft.Exchange.Management.Hybrid.RemotePowershellSession.Connect(PSCredential credentials, CultureInfo sessionUiCulture)
   at Microsoft.Exchange.Management.Hybrid.Engine.Execute(ILogger logger, String onPremPowershellHost, PSCredential onPremCredentials, PSCredential tenantCredentials, HybridConfiguration hybridConfiguration)
   at Microsoft.Exchange.Management.SystemConfigurationTasks.UpdateHybridConfiguration.InternalProcessRecord()'.
I have sought help, posting on the forum at community.office365.com -
http://community.office365.com/en-us/forums/158/t/212265.aspx. But I've got to a point where I believe the problem is more to do with how PowerShell is operating on the on-prem Exchange server.
Has anyone else come across this problem running the Hybrid Configuration Wizard?

Answer 1

Hello Darrell,
Have you verified the settings of Powershell virtual directories for the on-premises Exchange Servers? The following article has a list of some common issues with that virtual directory and how to correct them:
http://technet.microsoft.com/en-us/library/ff607221(v=exchg.80).aspxI would take a look at the one titled "Configure Kerberos Authentication" specifically to ensure everything
looks good.
As the article states you can run the Exchange BPA and it will check if any of these exist as well.