Symptoms

Registering a new SharePoint V2 Service Instance failed with 'The request failed with HTTP status : 401'
 

Diagnoses

The K2 Service Account was a site collection admin and had impersonation rights on the server.
The K2 for SharePoint components were installed on the site, but testing to generate a SMO with K2 within SP failed with the same result.

The delegation context value in the K2HostServer.exe.config file was set to 'ClientKherberos'.

 

Resolution

Changing the value to 'ClientWindows' and the problem got resolved.
This means that the Kherberos setup will work, but Windows will be used for a fallback from the point Kherberos fails on.
For more details on Pass-Through Authentication please refer to:
http://help.k2.com/onlinehelp/K2blackpearl/ICG/4.6.6/webframe.html_K2PA_-_How_K2_Pass-Through_Works.html