Can't authenticate with IIS Media Services' API using NTLM - rest

IIS Media Services 4.1:
I have a dedicated website setup on my win 7 dev box. I'm testing the REST service with Windows Auth turned on from both calls from a browser as well as a test C# winform app. Using the browser I try to hit http://iismediatestsite/services/smoothstreaming/publishingpoints.isml I get challeneged (good) but when I put in my domain creds I get into a loop where it keeps prompting for creds. My domain account is an admin on this box. If I use my test app I set UseDefaultCredentials to true but I get a 401 returned.
Using Basic Auth works fine with both clients.
Any ideas?
TIA

Okay apparently this is caused by an issue when authenticating by NTLM via a loopback address. It is better explained and a workaround provided here:
http://support.microsoft.com/kb/896861

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