windows authentication...

I have been hunting all day to a solution. My issue is with windows authentication popping up the login dialog box when I hit the website on IIS.  I have triple checked my credentials on IIS. I have ONLY windows authentication enabled. Web.config is down below. I have created a new app pool and set it to the Identity of Network service and then back to ApplicationPoolIdentity with no sucess.  I am at a loss at why it still requires the login box to pop up.  It is a Windows 2008 server with .NET 4.0 and IIS7 installed.

<appSettings><add key="MaintenanceFlag" value="N"/><!-- (capital letters) Y - causes maintanence, N - removes the maintenance redirect --></appSettings><connectionStrings><add name="SQLConnectString" connectionString="Data Source=searsdb2;Initial Catalog=ShopFloor;Persist Security Info=False;User ID=xxxx;Password=xxxx;"
      providerName="System.Data.SqlClient" /><add name="SQLConnectString2" connectionString="Data Source=searsdb3;Initial Catalog=ShopFloor;Persist Security Info=False;User ID=xxxx;Password=xxxx;"
      providerName="System.Data.SqlClient" /><add name="WarehouseDBConnectionString" connectionString="Data Source=sddb1;Initial Catalog=WarehouseDB;Persist Security Info=False;User ID=xxxx;Password=xxxx;"
      providerName="System.Data.SqlClient" /><add name="SMC_TESTConnectionString" connectionString="Data Source=searsdb3;Initial Catalog=SMC_TEST;Persist Security Info=False;User ID=xxxx;Password=xxxx;"
      providerName="System.Data.SqlClient" /></connectionStrings><system.web><customErrors mode="Off"/><authentication mode="Windows" /><roleManager enabled="true" defaultProvider="AspNetWindowsTokenRoleProvider"/><compilation targetFramework="4.0" strict="false" explicit="true" debug="true"><assemblies><add assembly="System.Core, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/><add assembly="System.Data.Linq, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/><add assembly="System.Data, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/><add assembly="mscorlib, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/><add assembly="System, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/><add assembly="System.DirectoryServices, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B03F5F7F11D50A3A"/><add assembly="System.DirectoryServices.AccountManagement, Version=4.0.0.0, Culture=neutral, PublicKeyToken=B77A5C561934E089"/></assemblies></compilation><pages controlRenderingCompatibilityVersion="3.5" theme="MainTheme"><controls><add tagPrefix="ajaxToolkit" assembly="AjaxControlToolkit" namespace="AjaxControlToolkit"/></controls></pages></system.web><system.webServer><modules runAllManagedModulesForAllRequests="true"/></system.webServer>