HTTP Error 401.1 - Unauthorized: Access is denied due to invalid credentials.

We just experienced a problem with web services authentication. Two of our production servers suddenly failed to authenticate users. We kept getting the 401.1 error. We are using "digest authentication". We had this issue before when we setup a new server. Rebooting the server fixed it. However, this time the trick didn't work. Finally, our administrator decided to remove the server from the domain and re-join it. That fixed the issue.