It’s an annoying issue when you can access the pwa site through any computer but not from the localmachine.
You may face the error “401.1 Access is denied” with BIG title at the top of the page says “You are not authorized to view this page”. The nice thing I’ve finally (after days of searching and trying fixes) finally found a solution by following this KB article: http://support.microsoft.com/kb/896861
The solution is simply a new DWord value named: DisableLoopbackCheck and valued to 1 under the path:
And reboot the server.