I need to run a website with just windows authentication. Given the following situation: The location of the default website is: c:\inetpub\wwwroot The location of my code is: c:\Sites\WebApp my hostfile is edited so any .local i use points to 127.0.0.1 I have created a new application called 'AppX' underneath the default website and point it to c:\Sites\WebApp. It will use the DefaultappPool. When I switch off anonymous and switch on windows authentication all works well when I go to localhost/AppX/. What i really want is a new website (No need to question why I want this). So I created Website2 and did exact the same creation of the application. Everything is the same; destination, app pool and authentication. Now when I browse to this website web2.local/AppX/ I get the 401.2 - Unauthorized error. What am I missing here?