Did you run through the Troubleshooting DNS problems section of the McAfee Logon Collector 2.0 Administration Guide?
Did you see this technet article? Kerberos and DNS troubleshooting
The article provides some suggestions and tools you can use to track down the issue. It talks about how the client computer must be able to resolve the DNS Domain of the target computer to the correct Kerberos REALM.
Also, make sure the ports are opened for the log collector to work. That is on page 142 of the guide.
Hope this helps...
Yes I have tried everything. I opened a support ticket and it has been determined that it is a bug with the MLC 2.0 extension. Tech support was unable to get it to work on their machine as well and was having the exact same error. Guess we will wait and see what they find.