BACKGROUND : I have an IIS 7.5 site containing thirteen different web applications where each application is simply hosting different web services. Nothing fancy. Here is a graphical view of the site.

Each of the web applications are running under their own application pool, all running .NET 4.0 Integrated Pipeline under the ApplicationPoolIdentity.

At the site level I have set the Authentication to be the following

When I try to access the web services within one web application I get 401 errors. All other web services in the other web applications can be accessed without errors.
Here is a snippet of the IIS log when the error occurs. The errors are the same when using a web service proxy class or when accessing the web service url via the browser.
Mozilla/4.0+(compatible;+MSIE+6.0;+MS+Web+Services+Client+Protocol+4.0.30319.269) 401 2 5 17721
Mozilla/4.0+(compatible;+MSIE+6.0;+MS+Web+Services+Client+Protocol+4.0.30319.269) 401 1 2148074254 15
If I access the Url directly from the browser I am prompted for my credentials. If I enter my domain credentials I still get the 401.1 error. 🙁
This error is repeatable on all devices in our domain, so it is not isolated to my machine.
I have verified the folder structure containing the web services in question has the same permission as the other folder structures of the twelve web services that work.
The Site is running in Kernel-mode authentication which is the default.
QUESTION: I’m a developer with limited knowledge of IIS. Anything else I could look at?
Thanks
The answer to my problem was rebooting my server. Still never got a definitive why the issue was occurring.