Password-protected directory is not allowing access, regardless of the fact that valid credentials are used. IIS error 401 appears:
Access is denied due to invalid credentials
Additional/custom ISAPI filter is enabled on domain that prevents password protection work.
IIS manager > host > Sites > domain.tld > ISAPI Filters
And make sure ISAPI filter 'url_protect' is present:
C:\Program Files (x86)\Parallels\Plesk\isapi\urlprotect.dll
All other url protect filters must be custom ISAPI filters.
If you see any additional .dll ISAPI filters for url protect, such as:
Please remove them and check directory protection once again.