From Windows XP Security Technical Implementation Guide
Part of Caching of logon credentials
Associated with IA controls: ECSC-1
The default Windows configuration caches the last logon credentials for users who log on interactively to a system. This feature is provided for system availability reasons such as the user’s machine is disconnected from the network or domain controllers are not available. Even though the credential cache is well-protected, storing encrypted copies of users passwords on systems do not always have the same physical protection required for domain controllers. If a system is attacked, the unauthorized individual may isolate the password to a domain user account using a password-cracking program, and gain access to the domain.
Configure the policy value for Computer Configuration -> Windows Settings -> Security Settings -> Local Policies -> Security Options -> “Interactive Logon: Number of previous logons to cache (in case Domain Controller is not available)” to “2” logons or less.
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