Reading the message a little more carefully... the problem is that the client is broken.
It's sending an Access-Challenge to the authentication port. ONLY Access-Request packets are allowed there. Servers send Access-Challenges to clients in response to Access-Requests. If a system is sending an Access-Challenge to the server, then that system is broken and wrong. Alan DeKok. - List info/subscribe/unsubscribe? See http://www.freeradius.org/list/users.html