Anyway, I found the solution thanks to this post by brielle128 at Notebookreview.com. It seems to be related to Realtek drivers on Windows Vista.

The solution:
– Have song playing so you can here the difference.
– Right click on the speaker icon in the task bar and select Playback Devices (or find it in the Windows Control Panel) The Sound dialog box opens up.
– From the Playback tab select the Playback device being used, in my case Speakers Realtek High Definition Audio (marked with a green checkbox) and click the Properties button. A new dialog box – Speaker Properties – opens up.
– On the Enhancements tab make sure Disable All Sound Effects and Immediate Mode are both unchecked. Check Loudness Equalization (on my setup all other unchecked) and hit Apply.
– Bingo! Sound volume is up a lot, maybe 50%!

I actually think my wife’s Acer Aspire One (also Realtek Sound card) running Windows XP has the same problem but unfortunately I could not find any similar settings there.

But this weekend after setting up a new Windows 2008 server and trying to connect to it, RDC shows a dialog “Looking for Credential Tiles”. The dialog is up for ever and if I click cancel instead of getting a login screen RDC hangs and I have to shut it down from the Task Manager.

The workaround seems to be to enter the correct credentials into Vistas Advanced User Accounts panel (I later changed password on my server and had the same problem all over again)

This solution is thanks to Denz and can be found as a comment to this Terminal Services Team blog post

1. Type control userpasswords2 into the Start menu search box and hit Enter

2.On the resulting User Accounts screen, click on the Advanced tab and then click the Manage Passwords button

3. On the Stored User Names and Passwords window, click Add button

4. On the Log on to: Type the IP of your server or the Server name, and user name and password

5. Denz instructions says to choose “A Windows Logon Credential” but this option is greyed out for me. However “A web site or program credential” works fine too

Denz and others also have Acer TravelMate laptops (but other models than me) so my theory is that this is a problem with the Acer software that comes with their laptops. Maybe the Bio protection software (fingerprint scanner).

[Update: I can confirm that the problem is related to the Acer fingerprint software. After uninstalling Acer Bio Protection ATU the issue is solved. I had Acer Bio Protection ATU version 6.0.00.16 installed which is the latest version available from Acer at this time]