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For some reason our SharePoint server rejects local requests with 503 Service Unavailable. Everything works fine when a user browses a site (e.g. http://spserver/) from another machine in the network. However, if the same user logs in to the server (RDP) and attempts to browse the same site from within the server they either:

  1. Continuously get the login prompt (if using the FQDN e.g. http://spserver/)
  2. Get a 503 Service Unavailable error (if using http://localhost/)

NOTE: The password is fine and the application pools are running fine (since users can connect remotely)

Any ideas please?

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Are you sure localhost is referencing the exact same web site in IIS as spserver? Did you extend a web application from localhost to spserver or set one of those host headers up as an alternate access mapping (AAM) of another? If not, I would be inclined to believe you are hitting two separate web sites in IIS via these two host headers. I agree with Dave Wise's answer below for continuously getting the login prompt if using the FQDN on the local server (assuming it gives you a 401 after three failed attempts). –  Danny Jessee May 10 '12 at 17:23
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up vote 2 down vote accepted

This sounds like the common "Loopback Issue" that happens when accessing a site from the server that is hosting it. Microsoft has a solution for this and I've had very good luck using option #2 to fix the issue.

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