So i have gone through everything i have been able to find but i haven't been able to get AD Auth working. We have a clean DNN install on Windows Server 2008 R2 with SQL Express 2005. I installed the extension, and configured it for our domain. It appeared to setup correct, and i made sure that windows authentication was set on the file. The Pipeline mode was set to classic, but after i changed the .net framework version to 4.0 it will now only run on 4.0 integrated. If i try anything else i get a 404 error. 

Any help would be appreciated. 

I ran into similar problems when trying out different settings.  I found that IIS was actually modifying the web.config file every time I changed the .Net settings.  I finally had to go back and create a clean web.config file from the DNN distro to get it working.

Okay i was finally able to get it working. I started with a clean install to make sure there wasn't a setting conflict. Then after installing the server i went in and did all the IIS configuration settings. After i did this i tried copying in a fresh web.config file however it crashed my website.

So i copied back the old config and setup the active directory extension. However at this point it still wouldn't work. So i removed all but the basic settings (enabled, user name, password) and it still wouldn't work.

So then i decided i was going to try different authentication types. So i went down the list one by one trying it until it worked. When i tried SecuredSocketslayer it started working. So from there the auto-login worked with no problems since i already had the zone settings done in group policy.