What about Kerberos in SharePoint 2007...

From Steve Carvajal's Blog, some links to Martin Kearn's Blog (Microsoft UK Consultant).

Configuring Kerberos for SharePoint 2007: Part 1 - Base Configuration for SharePoint

Configuring Kerberos for SharePoint 2007: Part 2 - Excel Services and SQL Analysis Services 

More tips:

All of your accounts must have SPN's, something like this:

Use the Setspn.exe tool to add an SPN for the domain account. To do so, type the following line at the command prompt, and then press ENTER:

setspn -A HTTP/[ServerName].Microsoft.com microsoft\SRV_OSS_DEV_Farm

setspn -A HTTP/[ServerName].Microsoft.com microsoft\SRV_OSS_DEV_App001

setspn -A HTTP/[ServerName] microsoft\SRV_OSS_DEV_App001

setspn -A HTTP/[ServerName].Microsoft.com microsoft\SRV_OSS_DEV__SSPROC

setspn -A HTTP/[ServerName] microsoft\SRV_OSS_DEV__SSPROC

setspn -A HTTP/[ServerName].Microsoft.com microsoft\SRV_OSS_DEV_App002

setspn -A HTTP/[ServerName] microsoft\SRV_OSS_DEV_App002

Second Step

To configure the IIS server to be trusted for delegation, using a domain account follow these steps:

1. Start Active Directory Users and Computers.

2. In the left pane, click Computers.

3. In the right pane, right-click the name for each these IIS servers, and then click Properties.

4. Click the General tab, click to select the Trust computer for delegation check box, and then click OK.

a. microsoftportaldev02

b. microsoftportaldev03

c. microsoftindexdev01

5. Quit Active Directory Users and Computers.

---UPDATE Jan 3, 2008---

Thanks to Liam Cleary fellow SharePoint MVP for remind me a great post he wrote a long time ago about SharePoint and Kerberos, you should take a look, Here you go...