A colleague of mine setup a new WSS Virtual Machine a few days ago, made a website in WSS, configured it to work with a FQDN and when he tried to access the website using Internet Explorer, he got the annoying generic error message from his browser.
We looked at IIS logs and saw one of quite common HTTP errors there. It was HTTP 401.1 again. I remembered of the most common cause of that error, made a workaround on my colleague's VM and thought it would be good to blog about it as it happened so many times to people I know.
The error was generated because of a security feature (or security fix) called loopback security check. The feature is present in Windows Server 2003 SP1 and later (including Windows Server 2008).
I will not write here about how to work around this problem because it was already explained in detail in the following KB article: http://support.microsoft.com/kb/896861.
A nice explanation about loopback check and effects it can have on your WSS or MOSS installation can be found here: http://www.harbar.net/archive/2009/07/02/disableloopbackcheck-amp-sharepoint-what-every-admin-and-developer-should-know.aspx
