This article is not relevant for users using IIS version greater than 6

When you get a repeated authentication request even when you type the correct credentials and ending up with a 401.1 Unauthorized after a few tries, there is a big chance that the user running the BizTalk360 service doesn't have the necessary permissions to create the SPN entries in the Active Directory needed for calling the back-end database with the logged on credentials. The following Microsoft KB describes this problem and explains the solution.

 

You receive an "HTTP Error 401.1 - Unauthorized: Access is denied due to invalid credentials" error message when you try to access a Web site that is part of an IIS 6.0 application pool

http://support.microsoft.com/kb/871179

 

Follow the article by creating the necessary SPN entries and the problem should get resolved.