I beat my head on the wall for awhile with the below error because the information online was fairly limited. Let me start by saying that using TortoiseSVN as a SVN client for Windows will authenticate against a Linux server running svnserve using SASL DIGEST-MD5 encryption. This means you should be able to authenticate against svnserve set up with these options configured which are “use-sasl = true”, “min-encryption = 128”, and “max-encryption = 256”.
When all of this started my goal was to create a SVN server with one repo for testing. I upgraded from TortoiseSVN 1.5.2 to the latest stable build of TortoiseSVN which was version 126.96.36.1992. I downloaded the latest stable release from the TortoiseSVN site here. Once installed everything was going fine with my original goal until I got to checking out the repository on my local PC.