In IIS I've got:
http://myserver/myapplication
http://myserver/reports
The reports app is reporting services in fact which uses windows authentication. myapplication is an asp.net application that uses forms authentication.
The server is outside the company domain. If I access the reports first and type in the user and password(local credentials created on the server) when prompted I can access the reports page, no problems. If then I go straight to my application's login page and try to login, the login page refreshes without doing anything. This always happen in IE 6. In IE 7 it happens intermittently. Does not happen in Firefox or if Fiddler is running in the background which seems to fix the problem on the fly.
I used wireshark to see what's going on and found that IE 6 send the windows authentication token obtained from the reports app to myapp. That was the only difference between IE and Firefox. IIS seems to freak out and simply interpret my POST to the login page as a GET and return.
If I add windows authentication to myapplication in IIS everything seems to work fine with any browser.
Why is this happening? A bug in IE or am I missing something?