I faced this issue after installing VSeWSS (Visual Studio Extensions for Windows SharePoint Services) V1.3. O/S was Windows Server 2003 SP2 and I was trying to package my solution for SharePoint in Visual Studio 2008 when it kept failing by giving following errors: “The HTTP request is unauthorized with client authentication scheme 'Negotiate'. The authentication header received from the server was 'Negotiate,NTLM'."" and (at times when I was trying different things) the following error: “The HTTP request is unauthorized with client authentication scheme 'Negotiate'. The authentication header received from the server was 'Negotiate,NTLM'.” Do the following to resolve, go to (try after each step in order): 0. If you are using domain account, make sure you are connected to that domain otherwise user (against which the VSeWSS site application pool is running) will not be able to authenticate. 1. Follow this article and make sure IIS en...