Well I gave tech support a call today, they walked me through setting up the tunnel.
They claimed that you cant use 0.0.0.0 & 0.0.0.0/0 as the S2S and remote IP/mask settings. Then he recommended me getting a DFR 210 instead
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Wasn't really helpful, so at this point I have the following enabled on the DIR-330:
IPSEC tunnel with 0.0.0.0 & 0.0.0.0/0 as the S2S and remote IP/mask settings, and preshared key auth.
L2TP over IPSec with preshared key enabled.
XP client VPN connection is setup as L2TP over IPsec with the preshared key entered.
I can connect, but it's only using L2TP an not the Ipsec preshared key to authenticate.
It seems that no IPSec tunnel is being initiated, so I don't know if its a local IPsec policy problem or the router config.
fatman would you be able to give me some ideas to get this figured out? Your help is greatly appreciated. I can post more info if needed.