Using Windows Integrated Authentication with IIS-hosted Dynamics AX Services
Version: Dynamics AX 4, Dynamics AX 2009.
When you host Dynamics AX web services on Microsoft Internet Information Services (IIS) v6 you might see an error message similar to the one shown in Figure 1 at runtime.
This may happen when IIS is configured to use Integrated Windows authentication to authenticate client requests and thus needs to exchange Negotiate security headers with the client.
IIS needs to be configured to support both the Kerberos protocol and the NTLM protocol for network authentication; see http://support.microsoft.com/kb/215383 for details.