Just to be clear. You get the IIS windows popup asking for credentials when you go to the site (this can be cured by moving the site into your Intranet or Trusted Sites list in Internet Options by the way). You enter your credentials into that box (domain\mikeh for example). Now Mike Horton is logged into the website and is the displayed name, has all his rights etc. Then you click logout on the site and it shows nobody logged in.

Now is where I'm getting confused. When you say you close the window which window are you talking about? Your internet browser or the IIS Windows popup window? When you try to manually login are you not seeing the login box with both the Standard Sigin and Windows Signin buttons?

When you log in with the other user via the IIS Windows popup is that user never displayed but the previous user is or is there a time period where it "suddenly" switches to the user that's currently logged into the computer?

When the authentication line for the provider (<add name="Authentication".... /> under <httpModules>) uncommented in the web.config it will automatically switch to the user that's logged into the computer at some point (I'm not sure what the time frame is that IIS checks this). The idea behind the automatic login is that the user doesn't have to login to the site manually. If you're going to have multiple users signing into the site using the same profile on the computer then you should comment out the line mentioned in my last sentence. This will mean that your users have to manually login to the site everytime via the DNN login after clicking on Windows Signin.

Also, are you running any caching on the site. I haven't seen any side effects to using caching with the AD provider but I'm just curious. I've had no problems logging out of DNN and logging in with a test user except that eventually I know the test user is going to be booted at some point and my Windows profile account is going to be logged in automatically.