The fact, I just did a clean install my machine (winxp) and manually create virtual directory from IIS and epected it just work, but no I need to perform a few additional step to make thing work.
Enable Integrated Windows Authentication on the local IIS
- Open IIS Manager (Internbet Information Services)
- Right-click the web site (in case you run it locally you only have Default web site) and pick Properties
- Choose "Directory Security" tab and click Edit on "Anonymous access and authentication control"
- In the opening window, uncheck "Allow Anonymous access" and check "Integrated Windows Authentication" (allowing anonymous can make that you don't have enough permissions to debug)