Two websites, same connection, same web.config, error

I have two websites on a windows 2008 web server web edition server.

They both use the exact same connection string in the web config:
       <add name="TUConnectionString" connectionString="Data Source=xx.xx.xx.xx;Initial Catalog=TU;Integrated Security=True" providerName="System.Data.SqlClient" />

They both are setup in IIS7 with the exact same settings. They both have frontpage extensions installed.
They both have the same Authentication, Anonymous user with the same password.
The MS SQL Server 2008 database has the same user setup with permissions.

However, in one website I can hit the database just fine. But the second website gives me this error:
Login failed for user 'NT AUTHORITY\ANONYMOUS LOGON'.

I cannot for the life of me figure out why one website can connect and the other cannot. Again, the anonymous authentication specific user is exactly the same. I have typed it in numerous times and retyped the password numerous times for both sites to make sure they are the same.

What am I missing?

Starr DuskkASP.NET VB.NET DeveloperAsked:
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Daniel WilsonCommented:
Sounds to me like a Kerberos issue.  Kerberos is set up for the DNS name you're using to get to one site, but not the other.

Maybe I'm wrong ... but when I'd covered all the bases you describe, that was the one I missed.
Starr DuskkASP.NET VB.NET DeveloperAuthor Commented:
Where is Kerberos set up? Becuase I am not doing anything with it myself.
Daniel WilsonCommented:
There's a lot to read on it ... and I haven't done it myself, so I'll refer you to some who have:
Starr DuskkASP.NET VB.NET DeveloperAuthor Commented:
It wasn't kerberos. I had that on.
The problem was, I believe, the two sites weren't the same, I needed:
    <identity impersonate="true" />
in both.

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Starr DuskkASP.NET VB.NET DeveloperAuthor Commented:
Kerberos in IIS7 is in:
select web site.
go to features panel
select authentication icon
enable windows authentication
select advanced settings
enable kernal mode authentication checkbox has to do with kerberos. read info below that.
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