This problem can be bypassed by modifying some settings in IE. Specifically you need to add the SPS site to the list of sites in the Local Intranet Zone as follows. 1. Open IE 2. Click on Toolx -> Internet Options 3. Select Security tab 4. Select Local Intranet Zone 5. Select Sites 6. Click Advanced 7. Add the base URL for your new SPS site to the list 8. Click OK 9. Click OK again. Once this is done you need to configure IE to automatically log in using current username and password for sites in the Intranet Zone. You should still be on the security tab with local intranet still selected 1. Click on Custom Level 2. Right at the bottom select "Automatic logon with current username and password. This should stop the login prompt for users who have access. If you want to avoid doing this on every pc you can apply this rule in Group Policy on your domain controller.
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