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Outlook prompting for password with new Exchange 2013

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I have Exchange 2007 and 2013.  I want to migrate to 2013 but I'm having issues in the testing phase.  I have a test account that I moved the mailbox to the new server.  I have a test PC with a modified hosts file that points to the new Exch 2013 server IP address.

When I log in with this test user, Outlook appears to connect and download the mailbox.  However a Windows Security dialog box pops up saying Microsoft Outlook Connecting to test@domain.com and it has a username and password field.  No matter what is entered here, it is NOT accepted, nor if forcefully entering the wrong information is the account locked out.

I can click cancel here and it proceeds to update the inbox and then says All folders are up to date.  But at the bottom in Outlook 2013 it says Need password and Outlook's icon in the taskbar has a yellow triangle on it.  I can send myself a test email and I get it (I personally am on the 2007 server), but after it sends Outlook 2013 prompts again for the password, and since it does not accept anything, I have to click cancel.

I have done ALL the windows updates available on this test PC.  Exchange 2013 is on CU6 which is the latest at the time of this writing.

Another thing is in the Lync 2013 client it says "Exchange needs your credentials".  No matter what is entered here, it will not make this message go away unless you click the X on this warning bar.  Lync itself appears to work regardless.

Any ideas?

I just changed the ExternalClientAuthenticationMethod from Ntlm to Negotiage.  Now the Outlook prompt does accept the domain password, but I don't want anyone to have to enter any type of credentials just to get on.  Note, this test is on the same LAN as the servers, so I haven't even tackled an external test yet, though last time I tried it was the same results.


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