Summary
When accessing the control panel (http://localhost:786) you get a challenge-response login prompt in the web browser windows. Clicking cancel results in following error message.

Error: Access is Denied.

Applies To
MachPanel all versions
IIS 6.0
IIS 7.0

Solution
This problem occurs when the anonymous user is miss-configured for a web site in IIS. You have to set appropriate user and its password in IIS for anonymous user settings. Please follow the steps below:

Step1: Create User MachPanel_Web or Reset Password for MachPanel_Web

1. Click on Start
2. Click on Run
3. Type compmgmt.msc and press Enter / click OK. This will open Computer  Management MMC.

In Computer Management MMC:

1. Under System Tools click on Local Users and Groups.
2. Click on Users.
3. Right click on Users and click New User to create new user with name MachPanel_Web.
4. If user already exists, Reset Password for this user and note current password.

Step2: Set MachPanel_Web as anonymous user

1. Click on Start
2. Click on Run
3. Type inetmgr and press Enter / Click OK. This will open Internet Information Services (IIS) MMC.

For IIS 6.0
In IIS MMC:

1. Expand your server i.e. PC_Name (local computer).
2. Click on Web Sites
3. Right Click and go to Properties for the website named: MachPanel Control Server.
4. Click on Directory Security Tab.
5. Click on Edit button for Authentication and access control option.
6. Check Enable anonymous access.
7. Enter username MachPanel_Web
8. Enter current password for user MachPanel_Web.
9. Check Integrated Windows authentication and click OK twice.

For IIS 7.0
In IIS MMC:

1. Expand your server i.e. PC_Name (local computer).
2. Click on Sites
3. Then go for the website named: MachPanel Control Server.
4. Double Click on Authentication icon form the Home Menu.
5. Click on Edit button from the actions and then check the Application Pool identity option.
6. Click on Application Pools under the PC_Name and go to the pool name:MachPanel Control Server.
7. Select MP AppPool 2.0 and click on advanced settings from the Edit Application Pool.
8. In the Process Model, click on the tab on the side of the Identity and select the Custom Account from there.
9. Enter username MachPanel_Web
10. Enter current password for user MachPanel_Web.