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How to configure Null Modem on serial port?

Previously, I use a windows XP to accept incoming connection by Network Connections > Create a New Connection > Accept Incoming Connection

I would like to deploy an Cisco router to replace this XP, how can i configure it? I convert the RS232 to smart serial cable, here is my configuration, fa0/0 connected to office LAN and S0/0 connected to null modem devices

The connection is up, however, the S0/0 is flapping up and down, and return packet is dropped by the router with msg encryption error

 

interface Serial0/0
 physical-layer async
 ip address 10.0.0.1 255.255.255.0
 ip nat outside
 encapsulation ppp
 dialer in-band
 async mode interactive
 peer default ip address 10.0.0.2
!

interface FastEthernet0/0
 ip address 172.16.1.31 255.255.0.0
 ip nat inside
 duplex auto
 speed auto
!

dial-peer cor custom
!
!
!
!
!
line con 0

line 1
 modem InOut
 transport input all
 autoselect during-login
 autoselect ppp
 stopbits 1
 

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