This didnt work. While checking the spn I see "RestrictedKrbHost" under spn list for windows 7 machine. Could this be related to the issue?
C:\WINNT\system32>setspn -l win7hydtest4
Registered ServicePrincipalNames for CN=WIN7HYDTEST4,OU=XXX,O
U=XXX,OU=Hyderabad,DC=XXXXX,DC=XXX:
RestrictedKrbHost/win7hydtest4.hyd.deshaw.com
RestrictedKrbHost/WIN7HYDTEST4
HOST/win7hydtest4.hyd.deshaw.com
TERMSRV/win7hydtest4.hyd.deshaw.com
TERMSRV/WIN7HYDTEST4
HOST/WIN7HYDTEST4