You receive an "HTTP Error 401.1 - Unauthorized: Access is denied due to invalid credentials" error message - Support article.

when you try to access a Web site that is part of an IIS 6.0 application pool
This behavior may occur if the following conditions are true:• The IIS 6.0 Web site is part of an IIS application pool. • The application pool is running under a local account or under a domain user account. • The Web site is configured to use Integrated Windows authentication only. In this scenario, when Integrated Windows authentication tries to use Kerberos, Kerberos authentication may not work. To use Kerberos authentication, a service must register its service principal name (SPN) under the account in the Active Directory directory service that the service is running under. By default, Active Directory registers the network basic input/output system (NetBIOS) computer name. Active Directory also permits the Network Service or the Local System account to use Kerberos.
More: http://support.microsoft.com/kb/871179/en-us