Cisco VPN :: 5520 AnyConnect Authentication With RADIUS Secure Method

I have been successfully able to setup Cisco AnyConnect VPN on ASA 5520 with 8.4 code.  I have set it to authenticate against the RADIUS Server (Microsoft Windows 2008 NPS server).  I have noticed one thing, on the server under "Constraints and Authentication Method".  I picked MS-CHAP-v2, but it is considered Less secure authentication methods.  I can click on Add and choose other Authentication methods like Smart Card or other Certificate, PEAP, EAP-MSCHAP v2.  I picked PEAP but then the VPN does not work.
 
So first of all does it really matter if I just leave it to MS-CHAP-v2?  Because from my understanding is that AnyConnect will authenticate to ASA and then ASA in the backend talks to the RADIUS server so from a security stand point this scenario shouldn't it be sufficient as no un encrypted or less secure information is available to the outside world? Secondly is there any documentation on using PEAP with Cisco AnyConnect?