When a client is connecting to SQL server via trusted connection, sometimes you can get this error. There is a good article about this (http://www.sqlservercentral.com/columnists/cmiller/cannotgeneratesspicontext.asp). It described several scenarios that can cause the issue and how to fix it.
I recently encountered another scenario. The SQL server and Enterprise Manager has beend running for days, and suddenly one day when I tried to browse the stored procedures in the Enterprise manager, I got the error "cannot generate SSPI context".
I was using SQL integrited security and the sql server service is running on my domain account. I checked everything according to that article, seemed everything is ok. I changed to use sa to connect to the server, it worked. After that I found the password of my domain account is expired, my account cannot be authenticated to connect the sql server by the windows integrated security. Though sql server sevice is running on my domain account too, but it’s not affected until i restart it. So I can still connect to the server by SQL server authentication. Since the error message is misleading and does not related to anything about my password, it’s not easy figure out the reason.