I'm having the exact same problem as Kevin, so this may not be just an isolated case. I'm running DNN 4.8.3 and 1.0.3 of the AD provider.
Tried forms authentication, windows authentication, impersonation on and off, my logon credentials for the impersonated user, both the install and the source version of the provider, removed the dll's from the bin folder and ran straight off the source code, deleted everything and reinstalled the install version, made this a trusted site in Internet options, made it an Intranet site, in short, just about everything I could possibly think to try. I added a link to my home page pointing directly at the windowssignin.aspx file, and when I click the link, I can get a windows dialog. It accepts my credentials just fine, but nothing else happens. The portal does not log me in, the login skin object still reads "Login" and the user skin object still reads "Register." If I click the login skin object, I get the standard vs. windows login dialog, I click Windows, then enter my domain\username and password. I always get the "Login failed loser, get a real life" error message. Luckily, DNN authentication still works.
I restarted every machine I have access to. I even restarted my cell phone. I went through the user guide so many times I have it memorized. I followed every step exactly as specified about 47 times, so I'm beginning to think this might not be something I'm doing wrong (I'm real quick at things like this). I replaced web.config 3 times over the course of my attempts at making this fly, I'd modified it every conceivable way, turning on forms, windows, impersonating, not impersonating, uncommenting the first httpmodule (authentication -- bad, bad, very bad, that bombs the site every single time without fail, giving a file not found message), gave all domain users modify permission at the portal root level, verified all domain users have modify permission on the windowssignin.aspx file, tried it facing east, facing west, standing on my head, and I even sacrificed a lamb and two goats to the AD gods. No AD goodness for me.
I've tried logging in from 3 different machines, and all respond exactly the same, with one interesting exception: When I remopte desktop into my server and click the windowssignin.aspx link on my home page, I get a not authorized message. Looking at the security log, all it says is "An error occurred during logon." The logon type is 3, Logon Process shows three Spanish characters, and the authentication package is NTLM. I do not get this error from any other machine, so it might be an issue with RDP.
I've tried this on the server, on a machine VPN'ed into the AD forest, and on another completely outside of everything. They all respond exactly the same, the server anomaly above notwithstanding, so it would appear to be a configuration issue. Can anyone confirm that this works in your AD environment using a clean install of 4.8.3 and the 1.0.3 provider? I'm fresh out of things to try, and the rest of the goats are looking really apprehensive. Thanksamundo.