401.1 Error Invalid credentials

[DLS]

I set up active directory to host email for an organization. Access to email
using OWA works ok. I set up a website that I want to limit access to the
hosted organization.

I add the <hostedSG> to permissions on the folder containing the website and
added <allow roles = "<domain\Domain Admins>,<hostedSG>" /> to the Web.Config
file under <authorization>. Authentication is set as: <authentication
mode="Windows" />

When I attempt to logon as either a domain admin or member of <hostedSG> I
get rejected with the 401.1 error invalid credentials. The site works when
anonymous is enabled.

What configuration settings am I missing or need to change to enable windows
authentication to work? Thanks.

 

[DLS]

Additional Info:

The application pool is running under Network Service, and the
NTAuthenticationProviders is "NTLM"

Thanks