Question : A Web Exception occurred because an HTTP 401 - Unauthorized response was received from Unknown

Thie above error has been noted on many messageboards without a clear fix to the issues.
The site is a single sbs 2003 server with a firewall router and windows updated to the latest security updates and a valid GoDaddy SSL certificate with a remote.domain.com dns address
The device is a HTC HD2 from O2 with activesync 6.5

Using Exchange Remote Connectivity Analyzer www.testexchangeconnectivity.com as my test base.
If I use domain\user and the correct password - no problems - successfully green ticks throughout and is able to count over 3000 messages.
If I use the valid email address of this account [email protected] instead of domain\user it fails with:
An ActiveSync session is being attempted with the server.
  Errors were encountered while testing the ActiveSync session
   Test Steps
   ExRCA is attempting to send the OPTIONS command to the server.
  Testing of the OPTIONS command failed. For more information, see Additional Details.
   Additional Details
  A Web Exception occurred because an HTTP 401 - Unauthorized response was received from Unknown
 
In the logfile C:\WINDOWS\system32\LogFiles\W3SVC1\ex100615.log
2010-06-15 09:10:55 W3SVC1 xxx.xxx.xxx.xxx OPTIONS /Microsoft-Server-Activesync/ - 443 [email protected] xxx.xxx.xxx.xxx Microsoft-Server-ActiveSync/12.0+(TestExchangeConnectivity.com) 401 1 1326
 (identifiable details removed)
Which other users have stated that 1326 means ERROR_LOGON_FAILURE but it is the same account for both authentication methods.
oma is the same issue - login as domain\user - works successfully, login as email address fails.

I suspect that once the email address login succeeds - the HTC HD2 device will connect.
Kind Regards
fosseitsl

Answer : A Web Exception occurred because an HTTP 401 - Unauthorized response was received from Unknown

Although I haven't got the email address login fixed - I have been able to resolve the HTC uthentication issue:

using These instructions to wipe exchange on device:
In ActiveSync go to Menu->Options. Make sure Microsoft Exchange is highlighted and click Delete. (from: http://forum.xda-developers.com/showthread.php?t=449876)

Email from O2:
 To Set Up Microsoft Exchange ActiveSync Email:
1. Ensure that device is configured with an active internet connection. Press the Start button.
2. Scroll down and tap Tools.
3. Tap ActiveSync.
4. Tap Menu.
5. Tap the Add Server Source.
6. Enter the Exchange Email address.
7. If Attempt to detect Exchange Server Settings automatically is selected, tap the box to remove the tick.
8. Tap Next.
9. Enter the Exchange Server address.
10. If the Exchange server does NOT require an SSL connection tap to remove the tick from the box: This server requires an encrypted (SSL) connection.
11. Tap OK.
12. Tap Next.
13. Enter the following information Exchange Username Exchange Password Exchange Domain Once complete, tap Next.
14. Tap Finish.
15. The handset will now synchronize with the exchange server. Click Next to continue. The Microsoft Exchange email account has been successfully configured


But...
http://ezinearticles.com/?Guide---Configuring-Exchange-Active-Sync-on-HTC-Hero-Android-Device&id=2901913

Tap the Mail icon then tap "Microsoft Exchange ActiveSync"
* Enter your email address in the top field and your Active Directory password in the second field
* Tap "Manual Setup"
* Enter the full Exchange server gateway URL (or IP address) in to the "Server address" field (eg: mail.yourdomain.com)
* Enter your Active Directory domain, you'll probably need to use the full domain name (eg: yourdomain.local). Your domain admin will be able to provide you with these details
* Enter your Active Directory username and password in the relevant boxes
* If your domain uses SSL (again, your domain admins will be able to tell you), make sure you tick the "This server requires an encrypted SSL connection"
* Click Next and the phone will say "Verifying account information..."
* If the connection succeeds, you'll be asked to specify what you would like to synchronize from Mail, Contacts and Calendar. If it doesn't succeed, you'll probably have entered in some information incorrectly, go back and re-enter everything. If it still doesn't work, contact your IT department
* Hit Finish Setup and the phone should begin to sync your mail

The trick is to using domain.local as the domain name
Kind Regards
fosseitsl