I have the same problem, but it can be "solved" by removing the user : pass@ part from the addy, then typing that by hand into the pop-up screen demanding a username/password.
I would of course like to offer you a solution, but don't have one yet. The Opera browser I normally use has no problems with the user : pass thing, but then doesn't quite work with a lot of the websites that use such addys, which forces me to use IE anyway.
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