For an overview of what NAP is and how it works check out the following document from Microsoft:

Network Access Protection, a platform for Microsoft® Windows Server® “Longhorn” (now in beta testing) and Windows Vista„¢ (now in beta testing), provides policy enforcement components that help ensure that computers connecting to a network or communicating on a network meet administrator-defined requirements for system health. Administrators can use a combination of policy validation and network access limitation components to control network access or communication. Administrators can also choose to temporarily limit the access of computers that do not meet requirements to a restricted network. Depending on the configuration chosen, the restricted network might contain resources required to update the computers so that they then meet the health requirements for unlimited network access and normal communication. Network Access Protection includes an application programming interface (API) set for developers and vendors to create complete solutions for health policy validation, network access limitation, and ongoing health compliance. This document describes the components of Network Access Protection, shows how they work, and provides a theoretical configuration using Windows Server “Longhorn” and Windows Vista.

Introduction to Network Access Protection