Getting this error when deploying a Silverlight RIAServices application to a new server.
Fiddler helped debug this one. Pulling up the Response header in Fiddler gave the following additional information:
IIS specified authentication schemes 'IntegratedWindowsAuthentication, Anonymous', but the binding only supports specification of exactly one authentication scheme. Valid authentication schemes are Digest, Negotiate, NTLM, Basic, or Anonymous. Change the IIS settings so that only a single authentication scheme is used
Had to reboot the server after making the change, but this resolved the problem.