Check that IIS is running. Make sure that IIS is configured to use Integrated Windows Authentication . Look for the checkbox on the Authentication Method dialog launched from the Directory Security tab of the site properties. Make sure that HTTP Keep Alives are enabled. You'll find that checkbox on the Web Site tab of the properties dialog, in the connections section. Add http://localhost to the trusted sites in Internet Explorer. To tell the truth, this seems to be a fix for the symtoms, not actually fixing the problem itself, but if it works it works. BTW, you'll have to uncheck the “Require server verification (https:) for all sites in this zone“ checkbox to add it as a trusted site.
ASP.NET tips, problems and solutions discovered during development