I have created site on my local machine that works fine on debug mode but when i put the site on local iis (7.5) of my machine i get
HTTP Error 401.1 - Unauthorized
In my case this had nothing to do with permissions. This is the "loopback check" protection. The problem was because I was connecting from the local machine that had the IIS.
Symptoms are: You connect and you get a browser prompt to insert credentials 3 times, then an HTTP 401.1 error.
Testing from a different computer works well.
Some sites will tell you to disable the "loopback check", but instead you have to add the FQDN domain you're connecting to to a whitelist, as described in this serverfault response:
https://serverfault.com/a/485011/415362