Windows: Using Hosts File to Access Web Sites with XP SP2

After upgrading to Windows XP SP2 (Service Pack 2), I started running into a problem with Internet Explorer (IE) and other things that use Internet Explorer settings, such as Visual Studio .NET, allowing me to get at my web sites. I am not completely sure if this really was a SP2 problem, but it seems that it is.

The problem manifests itself when I try to access a web site that is configured in the Hosts file (rather than DNS, found in \windows\system32\drivers\etc\hosts) to be able to get to the FrontPage server extensions, or other things where logon is required. It only seems to manifest itself with IE, as Mozilla can get to the same pages without problem.

When access is attempted, IE asks three times for a username and password. I provided a valid username and password, but after the third time, it reports an error: You are not authorized to view this page

I finally tracked down what the problem is. It seems that SP2 has tightened up the authentication requirements. The web page that finally gave me the solution is 294382 - Authentication may fail with "401.3" Error if Web site's "Host Header" differs from server's NetBIOS name . The solution is to run this script from the c:\inetpub\adminscripts directory:

cscript adsutil.vbs set w3svc/NTAuthenticationProviders "NTLM"

After running this, the problem magically went away.