Hi, I'm having pretty similar problems as described in case 139099, but the fix there doesn't seem to work for me. Here's the details:

Server:

• Win2003Srv R2 SP2 (stadalone, not a member of a domain).
• IIS6, TCP/443 (https).
• Anonymous access disabled.
• Integrated Windows authentication enabled.
• Local useraccouts
• Each useraccount has own virtual folder with change access and read access to site root.
• The 'adsutil NTAuthenticationProviders "NTLM"' -thing set to site root and useraccount's virtual folder.

Client:

• Win7 Enterprise
• Member of a AD-Domain
• IE8
• Allows three login attepts then fails.
• Using [webservername][username] in the logon window (Windows security)
• Logon using other browsers (Chrome and Firefox) works OK.

The Web services log shows one 401.2 and two 401.1 events. The Security Event log shows two events, first is Fauilure Audit (680), The second event is Fauilure Audit (529) with these details:

Logon Failure:
Reason:     Unknown user name or bad password
User Name:  [username]
Domain:     [webservername]
Logon Type: 3
Logon Process:  NtLmSsp 
Authentication Package: NTLM
Workstation Name:   [MyWorkstation]
Caller User Name:   -
Caller Domain:  -
Caller Logon ID:    -
Caller Process ID:  -
Transited Services: -
Source Network Address: [999.999.999.999]
Source Port:    20089

Any ideas appreciated.