EXCELLENT write up on client approval on the ConfigMgr Support Team Blog (these guys turn out gold regularly!)

How It Works: Automatic Client Approval in Configuration Manager 2007

Purpose:

This post is intended to explain how client approval works when a Mixed Mode Configuration Manager 2007 site is configured to automatically approve clients in trusted domains and to offer insight into how to troubleshoot scenarios where this is not working as expected.  The configuration is shown below:

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The short version:

  1. The new client performs a CCM_POST to CCM_System_WindowsAuth on the MP.
  2. The MP responds with a 401 as the request is anonymous and contains no security data.

Follow this link for the full article: http://blogs.technet.com/configurationmgr/archive/2010/01/20/how-it-works-automatic-client-approval-in-configuration-manager-2007.aspx