Sorry for the confusion, I am pretty new to DNN. There is a .sln file in the DNN4.8.4 directory and also one under DesktopModules/Authentication/ActiveDirectory. But when I work just with my project I open solution file of my project directly instead of the main DNN sln.  I  guess solution file for my website is under DesktopModules because we manually created it there. Isn't it right location?

So, are you saying, to solve this issue of recognizing Active Directory, am I supposed to open DNN sln file and compile it?

Oh Ok. Well sorry for the confusion again

I opened above mentioned solution and build it, now its giving new error (one thing is solved another is ready ). Error is : The target "SetVersionInfo" does not exist in the project. C:\Inetpub\wwwroot\DNN4.8.4\Website\DesktopModules\AuthenticationServices\ActiveDirectory\DotNetNuke.Authentication.ActiveDirectory.VS2005.vbproj DotNetNuke.Authentication.ActiveDirectory.VS2005
 

I clean the solution, built. Close visual studio, clean and build but getting same error. Then I commented out these lines in vbprof file. Is this right approach?

<Target Name="BeforeBuild">

<!-- <CallTarget Targets="SetVersionInfo" /> -->

</Target>

<Target Name="AfterBuild">

<!-- <CallTarget Targets="DeployFiles" /> -->

</Target>

Thank you very much Mike for your time and patience. Finally I got it working in Mozilla. Line createStatus = Users.UserController.CreateUser(objDNNUser) in code was returning 'DuplicateUsername', so I checked in all the tables, and there were remnants of the users that I was trying to login as. So, now forms and windows authentication are working in Mozilla. 

But IE7 is still having same issue.  Giving error "You are not authorized to view this page. You do not have permission to view this directory or page using the credentials you supplied". This site is in IE's local intranet sites list, the Website folder has proper permissions, I even tried to access site in IE7 without add-ins. Not working. When I provide my credentials on IE window, it asks three times for credential.

I am in debug mode when I am providing credentials to IE and it seems that the control is not going to the code even once to check for the validity of credentials. It seems that it has something t do with just IE. But don't know what.