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I have SharePoint Foundation 2010 installed on my local Windows 7 machine for development. When I have FIPS turned on, I am unable to test custom workflows because I get an error about FIPS.

My company is making FIPS mandatory on all computers at the end of the week. Everything I've found online just explains how to turn off FIPS, but that's not an option for me. Is there a setting I can change or a file that I can edit to still be able to run Foundation 2010 on my local machine, without completely disabling FIPS?

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The short answer is no. The longer answer is well not at the moment and the reason is below:

SharePoint Server uses several Windows encryption algorithms that do not comply with Federal Information Processing Standard (FIPS) 140-2 - Security Requirements for Cryptographic Modules. For example, SharePoint Server 2010 uses MD5, which does not comply with FIPS 140-2, for computing hash values that are not used for security purposes. FIPS 140-2 defines security standards which the United States and Canadian governments use to validate security levels for products that implement cryptography.

Source: http://support.microsoft.com/kb/2000371

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