I'm not sure how, but something happened with the IUSR account on my server. I host OWA and a personal site on the server, and one fateful day, I did something stupid (I'm sure; I don't recall what though) and both sites stared asking for domain logins. OWA also was refusing to show any images on the page.
I did some searching and found out that it's a permission problem with the anonymous login account (IUSR_MACHINE). I changed that account to be an admin account (no other account would work) and it 'works' but I obviously don't want this to be the case.
I followed the instructions here: http://windowsitpro.com/article/articleid/48361/how-can-i-check-the-password-of-the-iusr-and-iwam-local-accounts-on-a-machine.html for resetting the IUSR account password, but after setting the anonymous login to that account in IIS, and restarting it, it produced no change.
I'd recommend creating a new user and assign as the anonymous user, and give it read and/or write permissions to disk. For better security each site should have a custom user anyway so it's good to start with the first site to manage your own users. If you do that, then the built-in IUSR_machinename account becomes non relevant and unused.
This should help:
how-do-i-restore-the-iusr-account-used-by-iis-6
Solid information about the IUSR account fyi:
what-are-the-iusr-and-iwam-accounts-for-in-iis