Using IIS 6 or 7, does basic auth allow two people to use the same username/password combination to access the site simultaneously?
Yes. Any authentication mechanism (particularly with HTTP servers) allow multiple logins with the same credentials.
HTTP is stateless. The only way for the webserver to know whether you're still logged in is if you do some activity before it times out. Every time you do something the session counter is reset. If authentication didn't allow multiple logins then if you just closed your browser and tried to log back in you wouldn't be able to until the session times out.
Thanks goodness they aren't designed that way!
Actually, technically the webserver just serves up webpages. It's ASP or PHP etc that does session tracking.