IE8: Disabling the loopback check, 401.1 Unauthorized: Logon Failed

Dammit, today I couldn’t log onto SSP or any other host header site from inside my dev VPC.

I usually use host headers when I create SharePoint web applications on my development VPC’s. I create a loopback entry in the hosts file to direct the FQDN to the current server.

Today I wanted to check out the IE Developer Tools that come in IE8, so I installed it on my VPC. I specifically unticked the option asking if Windows Updates should be installed – I did not want anything other than IE8.

So I fired it up, used it a bit on http://servername:80, then tried to log in SSP (http://mysites/servername:80). The credentials kept getting rejected. I checked things like site collection admins, app pool accounts, even recreated the SSP. Still no luck login in.

I noticed the following in the Event Log:

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There was an Audit Failure immediately after an Audit Success entry. Here’s the failure error:

An account failed to log on.

Subject:
    Security ID:        NULL SID
    Account Name:        -
    Account Domain:        -
    Logon ID:        0x0

Logon Type:            3

Account For Which Logon Failed:
    Security ID:        NULL SID
    Account Name:        administrator
    Account Domain:        mysites.mossdev2008

Failure Information:
    Failure Reason:        An Error occured during Logon.
    Status:            0xc000006d
    Sub Status:        0x0

Process Information:
    Caller Process ID:    0x0
    Caller Process Name:    -

Network Information:
    Workstation Name:    MOSSDEV2008
    Source Network Address:    127.0.0.1
    Source Port:        49329

Detailed Authentication Information:
    Logon Process:
    Authentication Package:    NTLM
    Transited Services:    -
    Package Name (NTLM only):    -
    Key Length:        0

I got a hint that the credentials are passing through the first time, but then the error appears. My guess was that IE8 did something, or it has some security feature I am not aware of. I launched Firefox and as I thought, logged into SSP successfully. Damn IE8, I haven’t even started using it yet.

 After some searching on the net I found the following resources describing the problem. I disabled the loopback check.

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