I upgraded to IE8 and discovered I could no longer create web sites in Sitefinity's web-based Project Manager. Each time I attempted to create a new web site, I received the following error:
The account, you have authenticated with, has no permissions to create virtual directories. Please make sure that windows authentication is enabled.

Previously, (prior to IE8), this error could be fixed by right-clicking the IE icon and clicking "Run as Administrator" (see blog post). However, since my upgrade to IE8 this fix no longer worked. Instead I received a username/password dialog window:

I tried logging in using my local username, but continued to receive the permissions error.
Workaround: Permission Error in Sitefinity's Project Manager
I'm not sure what is causing this problem. I suspect IE8 has new security features that prevent the browser from auto-applying Windows Authentication to the Administrator account. I tried to do research but didn't find good answers. I did, however, find a workaround.
The workaround is to login to the username/password dialog window (shown above) using your computer's local Administrator account. However, by default in Vista this account is disabled. I found a helpful blog post that described how to activate the Vista Administrator account.
Enable the Hidden Vista Administrator account:
- Click the Start button
- In the Start Search Dialog Box type: secpol.msc
- Click the Local Policy
- Click Security Options
- Double-click Accounts: Administrator account status
- Click Enabled
- Click the OK button
Set a password for the Hidden Vista Administrator account:
- Click the Start button
- Click Control Panel
- Click User Accounts -> Add or remove user accounts
- Click the Administrator account
- Click Set the password or Change the password
- Create a password for the Administrator account
- Click the Set password or Change password button
The Administrator account can now be used to login to Sitefinity's Project Manager:
Sitefinity's Project Manager should now work fine. If anyone has other fixes or suggestions, please post a comment.