I have an aspx application running on server A (a W2K3 server), that is inserting information into a MOSS list that resides on Server B (also W2K3) by calling the the lists.asmx service provided by SharePoint. I'm reasonably convinced that the IIS piece of code to update the list is suffering from the "double-hop" issue, as it works fine when the browser is invoked from the IIS box (server A), or when running in debug mode from my desktop, but not when my aspx application's web server and the client (internet explorer) are running on different hardware.
The troubleshooting tips at this url: http://support.microsoft.com/kb/329986 would seem to confirm my suspicion, as temporarily switching to Basic authentication works. Following the instructions in this reference : Go to the complete details ...