Error Resolution for Server Authentication Issue with Sharepoint Application which uses Host Headers

When you create a web application with a host header on SharePoint which is installed on Windows Server 2008, your credentials can not be authenticated if you try to log in to the web application on the server itself; although you can access the site from outside.

The main reason for this issue is, the system blocks the authentication procedure while resolving the host header given to the web application. To resolve this issue, a modification must be done to the server’s registry.
To resolve this problem,  Administartor has to perform following steps.

1.      Click Start, click Run, type regedit, and then click OK.

2.      In Registry Editor, locate and then click the following registry key:

      HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Lsa\MSV1_0

3.      Right-click MSV1_0, point to New, and then click Multi-String Value.

4.      Type BackConnectionHostNames, and then press ENTER.

5.      Right-click BackConnectionHostNames, and then click Modify.

6.      In the Value data box, type the host name or the host names for the sites that are on the local   computer, and then click OK.

7.      Exit Registry Editor, and then restart the computer.

      Note: For Example if you used Host Header as “sharepointdev” for your sharepoint application then you need to add this name in BackConnectionHostNames box.

Following are the articles which explains the issue and fix for the same.
http://vspug.com/nezihtinas/2009/04/21/unable-to-authenticate-to-a-sharepoint-portal-on-the-server-itself/
http://support.microsoft.com/kb/956158/en-us

This is known issue with SharePoint 2007 on Windows Server 2008 platform and not specific to any sharepoint application. The above registry modification must be done for all other SharePoint applications which are using Host Header.

Thanks
Disha Shah