Web server is IIS 7. Browsing by FQDN works fine. However, browsing by IP a login prompt appears. I saw this blog http://blogs.msdn.com/b/jiruss/archive/2007/04/13/can-t-browse-site-by-ip-address-that-requires-authentication-page-cannot-be-displayed.aspx and I confirmed that Enable HTTP Keep Alive is checked. In IE if I add the IP address to the Local intranet sites then I can browse via IP address. So my question is - is there something else on IIS that needs to configured to allow browsing by IP? Or is this not IIS related?
This is IE related; it will automatically pass your Windows login credentials to pages that request authentication, if that page is hosted on a server in the Intranet zone (i.e. using the same DNS suffix as your machine.) Don't quote me on that but it's my understanding.
If all clients are in a domain and you require IP browsing, you can deploy a GPO that adds that IP to the Intranet zone. Otherwise work on your DNS infrastructure so that FQDN browsing will work.
Other browsers don't have this issue because they don't give out your Windows login credentials; some consider this a good thing :)
This is a feature of Internet Explorer Security.
Basically IE uses the logic that if the address requested contains periods and is not listed in the Local Intranet sites list, the site is relegated to the Internet zone which by default has the most restrictive security settings.
In your case Windows Authentication wouldn't pass credentials to what it considers an Internet site, hence the prompt for credentials.