This was exactly the problem:
http://support.ipswitch.com/kb/IM-20051206-DM07.htm
You'll run into it especially if your database is on another server (also a similar problem with AD). The reason is that .NET doesn't use the anonymous user when attempting to connect to the database. It then promptly doesn't log anything and denies the authentication.

A security suggestion: if you edit the machine.config, instead of using the suggested
<identity impersonate="true" username="IMAILSQL" password="password"/>
use
<identity impersonate="true" username="" password=""/>
which avoids credentials stored in a plain text file. That and their processModel change will cause it to use the IIS anonymous user credentials when accessing the DB.

[ I couldn't resist calling myself a numchuck for not knowing at 12:34 AM what everyone else knows - you have to refer to Knowledge base article Number 2 0 0 5 1 2 0 6 dash D M 0 7 to make it work ]


----- Original Message ----- From: "Deborah Chard" <[EMAIL PROTECTED]>
To: <[email protected]>
Sent: Tuesday, October 31, 2006 6:48 PM
Subject: RE: [IMail Forum] Unable to log into web IClient 2006.1 after upgrade


Mike,

I ran into the same problem and posted it to this forum a couple of weeks
ago.  I finally contacted Ipswitch tech support and after 5 hours on the
phone with a tech could not figure it out. We worked to change permissions
in IIS, the registry and all over the place and the issue was not
satisfactorily resolved.  Look at the permissions that the default website
anonymous user has. If you do get this resolved, please post here because I
will have to go back and revisit this issue.

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