MSMQ Returns "Timeout" Exception, Windows Server 2008 Showing Logon Failures From My PC

Hi, hoping someone could help with this, it's driving me nuts. 

I'm on a development workstation running Windows 7 Pro 32-bit. We really heavily in our development environment on MSMQ services. Everything was running fine until 3 days ago, now when I run an ASP.NET debug session from Visual Studio 2008 (would love to upgrade, but cannot) I am seeing "Timeout for the requested operation has expired" exceptions whenever our code calls any of our MSMQ private queues running on a Windows Server 2008 machine. It seems like the request messages are being accepted by the server, but I cannot receive any responses back on my PC and the response messages are getting queued up in the private queues. I've tried this with several different private queues, including a dummy one I created from scratch to troubleshoot this. 

After further investigation, using WireShark I noticed that I was getting DCE/RPC faults with "access denied" statuses when the Win2008 server was trying to communicate back to my Win7 machine. I looked at the Security event logs on the Win2008 server and there are a ton of Audit Failures related to my Win7 PC that look like the event log message below. I just can't tell what service is failing to authenticate and on which machine (my PC or the server)? That's about as far as I've been able to get with this, I've tried opening up the permissions on the MSMQ service running on my Win7 machine, it looks like the private queues on the Win2008 server grant full access to EVERYONE and ANONYMOUS. Would LOVE some help with this, I've spent almost 3 days troubleshooting this.

An account failed to log on.

Subject:
                Security ID:                            NULL SID
                Account Name:                     -
                Account Domain:                 -
                Logon ID:                               0x0

Logon Type:                                          3

Account For Which Logon Failed:
                Security ID:                            NULL SID
                Account Name:                     BONDEV2PC$
                Account Domain:                 PC123

Failure Information:
                Failure Reason:                      Unknown user name or bad password.
                Status:                                    0xc000006d
                Sub Status:                             0xc000006a

Process Information:
                Caller Process ID:  0x0
                Caller Process Name:            -

Network Information:
                Workstation Name:              BONDEV2PC
                Source Network Address:    xxx.xxx.xxx.xxx
                Source Port:                           52167

Detailed Authentication Information:
                Logon Process:                     NtLmSsp 
                Authentication Package:     NTLM
                Transited Services:                -
                Package Name (NTLM only):              -
                Key Length:                           0