>>>>>Probably different IIS/OS versions (I'm looking at a W2003 server). If the option is not available from your IIS context menu, can't you use the Windows Explorer to set permissions?
>>>>
>>>>Nope, I just get the web sharing option. I'm using IIS 5.1 on XP Pro
>>>
>>>Assuming you have administrative rights on your current login, you may turn on the security tab in Windows Explorer through (I'm not exactly sure of this, but at least it may serve as a rough guide) Tools : Folder Options : View : Advanced : and... er... something to do with file sharing... (sorry... I have a XP box at home, can check it later).
>>
>>Hmm, I normally have that option available, maybe it's not available because this time my PC is part of a workgroup, not a domain. I can't find anything that looks like it's relevant where you suggested, so if you could check it out at home and let me know I'd appreciate it.
>
>I don't know if you're still needing it, but if that's the case here it (sort of) goes: uncheck the option that refers to "Simple File Sharing" and that may be also marked as "(Recommended)" (my XP is in Portuguese, so don't know the actual checkbox caption in English).

Thanks Antonio, I did as you suggested and can now access the Security for folders, but changing the rights for IUSR_MyMachine to Full control still prompts for a username and password when I go to http://localhost.