IIS Windows Authentification Web Site Keeps Asking for Credentials

Problem:
Although the provided credentials are valid, IIS keeps prompting for credentials.

Solution:
 Disable the loopback check by setting the DisableLoopbackCheck registry key.

To set the DisableLoopbackCheck registry key, follow these steps:

1. Set the DisableStrictNameChecking registry entry to 1.
2. Click Start, click Run, type regedit, and then click OK.
3. In Registry Editor, locate and then click the following registry key:
   HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa

   
   
4. Right-click Lsa, point to New, and then click DWORD Value.
5. Type DisableLoopbackCheck, and then press ENTER.
6. Right-click DisableLoopbackCheck, and then click Modify.
7. In the Value data box, type 1, and then click OK.
8. Quit Registry Editor, and then restart your computer.

Source: http://support.microsoft.com/kb/896861