Here is the third one from my closet.
The following steps would help you configure Digest Authentication on IIS
* Launch IIS Management Console.
* Right click on the website for which Digest authentication should be enabled and select the properties.
* Click on the Directory Security Tab and Edit the Authentication and Access control
* In the Authentication Methods, Disable Anonymous access and select Integrated Windows authentication and Digest authentication for Windows Domian servers.
* Pass the alert and apply the settings.
* Restart IIS
Digest Authentication is now setup on IIS.
Just remember one thing that in order to configure Digest authentication in IIS, the server that hosts IIS should be in a Domain that provides the user access for that machine
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Courtesy:http://technodesk.wordpress.com/2009/10/23/iis-digest-authentication/