Click File (on the menu bar), Tools, Internet Options 3.
When I closed out and tried again the connection was lost.
If checked, uncheck the "Use a proxy server for your LAN..." selection and click OK.
I'd start by reviewing the event logs on your IAS server for reasoning as to why it's not authenticating your client.
The MS-Logoff digest header has been returned from the website.
This header specifically instructs the digest package to purge credentials for the associated realm.