Check to see that the MOSS server is in the Trusted Sites list in IE. If
it's not there, add it and restart IE. We had a similar problem  with SPS
2003.

Sounds like you're using IE credential caching.

On that machine, in IE

Tools/Options

Select the Security Tab, and select "Custom Level" on the appropriate zone.

Scroll down to "User Authentication" and select "Prompt for user  name and
password" (Or make sure that "Automatic logon with current user name and
password" is not selected)

And I think that will clear out the cache.

What's interesting, is that you state even after being prompted  for
credentials, it fails. But this should clear it, and you can try again on
that machine.

That did it, I cleared the cache and I was able to access  the site.
Thanks to everyone else who answered.

Verify that it is in Intranet or Trusted sites zone list in IE7. Be aware that
IE7 changed the defaults for these zones and Integrated Authentication is turned
off. Go to the custom properties for these zones, scroll all the way to the
bootom, and turn on 'Automatice Logon with Current Username and password'

If that's not it, I'll have to think some more

Does it let you into the site  if you enter  the password  3 times?
If so look on the page for maybe an icon with a big red X or
something else you don't have rights to. Then make sure you allow
people access  to this thing.

"Hint check the site images if it has one, make sure it's published
or if it's on the front end web servers check the actual file's
permissions".