Today, I am going to show you how to fix How to Fix: “HTTP Error 401.3 – Unauthorized” Error in IIS. While working on my site, I got a small issue with IIS. I had set up a new virtual directory for the site but when the site was viewed in the browser the IIS error was displayed:
Server Error in Application “DEFAULT WEB SITE”
HTTP Error 401.3 – Unauthorized
You do not have permission to view this directory or page because of the access control list (ACL) configuration or encryption settings for this resource on the Web server.

As you can see on the picture below:

Judging from the error the permissions on the folder was incorrect. And a quick peek at the properties confirmed this. Admittedly, I don’t have much experience with  IIS 7+ (IIS 6 & 6.5 that’s a different story). So when I tried to add the correct user account to the I couldn’t identify the correct user account. Honestly, I was actually looking for IUSR_MachineName . As it turns out IUSR_MachineName was removed in IIS 7 and replaced with IUSR. So adding the IUSR user account to the folder and everything worked. Yes, it was a simple fix but it can be an annoying one if you don’t know what to look for.