Access Denied with Windows Server 2008 and MOSS when Crawling

So i created a new vm using Windows Server 2008, SharePoint Server 2007 + SP1 + Infrastructure updates.  I'm also using a least priveleged account setup with least priveleged accounts running the individual MOSS Services and app pools.  When I started a crawl of local office sharepoint server sites i noticed i was getting 401'ed by SiteData.asmx.  

If you receive an warning in your event log with event id 2436 - "Access is denied. Check that the Default Content Access Account has access to this content, or add a crawl rule to crawl this content.   (0x80041205)". 

or this one in your crawl logs

Access is denied. Verify that either the Default Content Access Account has access to this repository, or add a crawl rule to crawl this repository. If the repository being crawled is a SharePoint repository, verify that the account you are using has "Full Read" permissions on the SharePoint Web Application being crawled. (The item was deleted because it was either not found or the crawler was denied access to it.) 

After a day of banging my head against my desk i figured out that Loopback check needed to be disabled.  Interesting that IIS 7 isn't mentioned in the KB.  Here's the Disabling the Loopback Check KB.