Error 401.1 when you browse a Web site that uses Integrated Authentication and is hosted on IIS 5.1 or a later version
When you use the fully qualified domain name (FQDN) or a custom host header to browse a local Web site that is hosted on a computer that is running Microsoft Internet Information Services (IIS) 5.1 or a later version, you may receive an error message that resembles the following:
HTTP 401.1 - Unauthorized: Logon Failed
This issue occurs when the Web site uses Integrated Authentication and has a name that is mapped to the local loopback address.
For more details please refer to the following article: