Mike, I grabbed the DNN source and have it all setup on my development machine.  I put a breakpoint in the Global_BeginRequest method of Global.asax.vb so I could look at the HttpRequest object.  I see whenever anyone from the domain sends a request, the LogonUserIdentity.Name property does indeed contain a value of "OurDomain\LogonName", but no DNN user gets auto created.  I went to grab the ADSI source file from the project downloads, but the source actually has the install files in it.  It is missing the actual VB files.  Can you check on that? I would like to step through the ADSI code to see what is happening.

Doh, that's right. It's been about 3 years since I did DNN development and forgot that.

Anyhow, I installed the source version.  I placed breakpoints on the 1st line of OnAuthenticateRequest method in both the DotNetNuke.HttpModules.Membership.MembershipModule and DotNetNuke.Authentication.ActiveDirectory.HttpModules.AuthenticationModule. 

What I am seeing is:

if the user already has a DNN user account  with a username of "Domain\Loginname" OnAuthenticateRequest is called in the MembershipModule and then in the AuthenticationModule.

If they are a new user to the site, OnAuthenticateRequest is called in the MembershipModule but never progress past that point.  But I can see in the MembershipModule that the user has IsAuthenticated=true and their LogonName is "Domain\Loginname".

Have any idea whats going on?

Okay I found the file .

However I don't see any reason why it wouldn't work properly still. Besides my questions above:

Do you have the following in the <httpModules> section of your web.config?