Automatic FixIt: You receive error 401.1 when you browse a Web site that uses Integrated Authentication and is hosted on IIS 5.1 or a later version

I asked the FixIt team for this a while back and they have delivered.  Now if you ever run into the symptoms below the chances are good we can automatically fix it with just a few clicks of the mouse:

The Symptoms: When you use the fully qualified domain name (FQDN) or a custom host header to browse a local Web site that is hosted on a computer that is running Microsoft Internet Information Services (IIS) 5.1 or a later version, you may receive an error message that resembles the following:

HTTP 401.1 – Unauthorized: Logon Failed

Note You only receive this error message if you try to browse the Web site directly on the server. If you browse the Web site from a client computer, the Web site works as expected.

Additionally, an event message that resembles the following event message is logged in the Security Event log. This event message includes some strange characters in the value for the Logon Process entry:

Event Type: Failure Audit
Event Source: Security
Event Category: Logon/Logoff
Event ID: 537
Date: Date
Time: Time
User: NT AUTHORITY\SYSTEM
Computer: Computer_Name
Description: Logon Failure:
Reason: An error occurred during logon
User Name: User_Name
Domain: Domain_Name
Logon Type: 3
Logon Process: Ðùº
Authentication Package: NTLM
Workstation Name: Computer_Name
Status code: 0xC000006D
Substatus code: 0x0
Caller User Name: -
Caller Domain: -
Caller Logon ID: -
Caller Process ID: -
Transited Services: -
Source Network Address: IP_Address
Source Port: Port_Number

The Cause: This issue occurs when the web site uses Integrated Authentication and has a name that is mapped to the local loopback address.

The Fix: If you happen to come across any symptoms like this then take a look at the following Knowledge Base article:

896861 -  You receive error 401.1 when you browse a Web site that uses Integrated Authentication and is hosted on IIS 5.1 or a later version

The cool part is that this KB article contains a link to a Wizard that will fix this issue for you automatically.  All you have to do is download and run it.  This Loopback issue impacts almost any product that uses IIS, including your very own favorite, WSUS.

Jarrett Renshaw | Content Quality Program Manager