Is there anyone else who has had issues authenticating to AD? Even just doing Windows authentication presents a whole different set of issues.

I can see successful ldap connections, the string is correct in mixed mode authentication and I keep getting this error:
Event code: 4006
Event message: Membership credential verification failed.
Event time: 12/11/2009 1:25:45 PM
Event time (UTC): 12/11/2009 6:25:45 PM
Event ID: be4e242092d74a96882445f78c349bec
Event sequence: 81
Event occurrence: 4
Event detail code: 0

Application information:
Application domain: /LM/W3SVC/1/ROOT-24-129050284915055660
Trust level: Full
Application Virtual Path: /
Application Path: C:\Inetpub\wwwroot\NIAKENT\
Machine name: NIA-CMS

Process information:
Process ID: 3500
Process name: w3wp.exe
Account name: NT AUTHORITY\NETWORK SERVICE

Request information:
Request URL: http://nia-cms.nianet.org/CMSPages/logon.aspx?ReturnUrl=Membership credential verification failed.fCMSSiteManagerMembership credential verification failed.fDefault.aspx
Request path: /CMSPages/logon.aspx
User host address: 192.42.142.50
User:
Is authenticated: False
Authentication Type:
Thread account name: NT AUTHORITY\NETWORK SERVICE

Name to authenticate: wendy.murray


With just plain Windows authentication, the users do automatically import from AD and the inline tool bars disappear in CMS Desk:


Windows Login with Global Admin and Full Editor Rights:

No Inline Toolbar


Local Forms Authentication:

Inline Tool Bar appears no problem