Hi Nick,

In the debugs, i see the message "Group = DefaultRAGroup, IP = , All IPSec SA proposals found unacceptable!"

Try using a transport mode transform set for this purpose. Use 3des-sha, if it does not bring in any luck then change the encryption from 3des to aes-128 and try again

---8<--------------------------------------------------------------------------
crypto ipsec transform-set l2tpsha esp-3des esp-sha-hmac
crypto ipsec transform-set l2tpsha mode transport
crypto dynamic-map SYSTEM_DEFAULT_CRYPTO_MAP 65535 set transform-set l2tpsha
---8<--------------------------------------------------------------------------

Other parameters to look into:-

1. Windows Vista L2TP/IPsec introduced some architectural changes that prohibited more than one simultaneous user from being connected to a head-end PIX/ASA. This behavior does not occur on Windows 2K/XP.

For mor details, please refer

http://support.microsoft.com/kb/942429

Vista PC Not Able to Connect
If the Windows Vista computer is not able to connect the L2TP server, then verify that you have configured ONLY mschap-v2 under the ppp-attributes on
the DefaultRAGroup.
http://www.cisco.com/en/US/products/ps6120/products_configuration_example09186a00807213a7.shtml#vist

tunnel-group DefaultRAGroup ppp-attributes
no authentication chap
authentication ms-chap-v2

NOTE: As per my knowledge i have any understanding that Windows Vista and Windows 7 got almost same built-in architecture.

2. Are you establishing VPN behind a NAT/PAT device?
If yes, then

---8<----------------------------------------------------------------
    crypto isakmp nat-traversal  3600
---8<----------------------------------------------------------------

3. What code are you running on ASA ?

4. Make sure that "IKE and AuthIP IPsec Keying Modules" and "Ipsec Policy Agent' services are started.

5 While attempting l2tp/ipsec VPN connection, please do gather silmultaneous debugs for "debug l2tp event 1" , debug cry isa 127 and debug cry ipse 127

- For L2TP define new users like this:

   ---8<----------------------------------------------------------------
   username password mschap
   ---8<----------------------------------------------------------------

6. If possible, post the new VPN configuration after modifying the old one as suggested above.

HTH...

Regards,
Mohit