Prototype Ajax call yields 12152 in IIS but only when running IE

Question

We have an ASP.NET 3.5 app that relies on Prototype for Ajax calls. It is hosted on IIS 6 in Windows 2003 Server. It uses Integrated Windows Authentication.

Here are the scenarios in which it works:

1. Running on default site
2. Running on new site when client is running Fiddler and IE
3. Running on new site when client is running Firefox
4. Running on new site when client is running Opera

Here is the scenario in which it doesn't work (returns 12152):

1. Running on new site when client is running IE (no Fiddler)

It's perplexing because Fiddler appears to be changing the way it works so I can't see the request/response when it isn't working.

Another unusual symptom is that the failure scenario also prompts the user for a password when the Ajax call is made (and before the error is displayed). The user should already be authenticated.

The code was written by a contractor and there is alot of it so I do not feel comfortable posting it. I know this might hinder those who want to help so I appreciate any suggestions you might have.