Windows XP IIS Passwords

This is my first visit to this forum and I feel rather frustrated for not being able to figure this out on my own. I'm not a PC novice, but this is my first foray into using XP and a web server.

My story is this. I have operated and maintained a small web design business and ASP developer from my home for the past five years. Until this weekend, I had always used Windows 2000 Profession, with a static IP address provided by my ISP. And I had always been able to secure sites in progress with unique user names and passwords for the clients to preview the pages with.

Because of issues I was having with some new software that just didn't function well in W2K, I shelled out for a copy of Windows XP Pro knowing that it had the same capabilities as Windows 2000 with the updated IIS version of 5.1

The pages that I host, most on Virtual Directories on non NTFS drives, that are open to public view display perfctly, as I would have expected.

But any page that I have locked down with a password authentication properly displays the user and password prompt. I will enter my user name and password, it will think about it for a few seconds and then reply back with the same screen with either my IP address in front of the user name or my computer name in front of the user name, but no matter which of the three options, the password always fails and after three tries I get the error 401.1 code.

If I unpassword protect the websites, they show up fine.

I at first thought it was because the website was not in the NTFS directory, so I copied and repathed the website to NTFS and got the same result.

Do I have to go back to Windows 2K or is there just some major difference between IIS 5.0 and 5.1 that cuases this behavior that I have not configured for?

Thanks in advance for your input.