If you are using WIF and C2WTS and you get the above error, it’s probably because the C2WTS service is not yet started.
It’s this one in the Services windows (which is in the “Administrative Tools” menu):
“Claims to Windows Token Service”
and the description is:
“Service to convert claims based identities to windows identities”
Note that you must use Windows domain user accounts. These accounts must have a Universal Principal Name (UPN).