I use a completely isolated network for storage traffic- if not physically then via an isolated VLAN. There's no DNS on that network so it's best to disable the self-registration as suggested but there's no significant problems if it's not.
We've been dealing with this problem on our Windows Server 2003 and 2008 servers as well. Microsoft really should include this in their iSCSI configuration guide.
I have always unchecked the DNS registration options on an iSCSI network. It is a best practice. I also modify the binding order, as well as some other tweeks and mods.
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