The error occurs when you connect your Windows Phone 7 device to your computer with the USB cable. Zune opens and tries to connect to the device, but pops up an error message that says "Can't connect to your phone. Disconnect it, Restart it, then try connecting again".
The most common solution to this from reading the forums is as follows:
There is an issue with the Zune personal digital certificate.
To resolve this issue, create a new certificate:
1. If it is running, close the Zune software and disconnect your phone.
- Open the certificate Manager. To do this, click start, type certmgr.msc, and press enter.
- Expand Personal, and then expand Certificates.
- Click the heading for the Issued Bycolumn to sort the column, and then look for one or more certificates that is issued to "zune-tuner://windowsphone/..."
Right-click that certificate and then click delete. Click Yes.
- From the Filemenu, click Exit.
- Start the Zune software and connect your phone to create a new certificate.
This seems to resolve the error for some people, but it didn't work in my case. Restarting Zune didn't create a new certificate. So after a lot of digging around with process monitor I found an additional step that worked for me and triggered the Zune certificate to be recreated.
- Delete the Zune certificates following the instructions above
- Before restarting the Zune software, locate the folder C:\Users<Username>\AppData\Roaming\Microsoft\Crypto\RSA
- Inside that folder there should be a directory named something like s-1-5-21-123456890-1234567890-1234567890-1111
- Rename this folder eg. adding .bak to the end of the folder name
- Restart the Zune software - the folder should be recreated and a new Zune certificate should now be created in the certificate store
- I needed to restart Zune one more time in order for the error to clear and the phone to connect successfully.
I hope this helps anyone else out there with the same problem.