Mixed Mode allows users to connect to an instance of SQL Server using either Windows Authentication or SQL Server Authentication. Users who connect through a Windows NT 4.0 or Windows 2000 user account can make use of trusted connections in either Windows Authentication Mode or Mixed Mode.
SQL Server Authentication is provided for backward compatibility. For example, if you create a single Windows 2000 group and add all necessary users to that group you will need to grant the Windows 2000 group login rights to SQL Server and access to any necessary databases.
Whenever possible use Windows authentication only.