Proper configuration for Webdav?

[TECK]

I'm trying to experiment with Webdav. So I've setup a simple
configuration for that:

http {
...

	client_body_buffer_size		128k;
	client_body_temp_path		/var/lib/nginx/client 1 2;

...
}

server {
	listen				192.168.1.2:80;
	server_name			webdav.domain.com;
	access_log			/var/log/nginx/localhost.access.log	main;
	error_log			/var/log/nginx/localhost.error.log	error;

	root				/var/www/webdav;

	location / {
		auth_basic		"Restricted Access";
		auth_basic_user_file	htpasswd;
		dav_access		user:rw group:rw all:rw;
		dav_methods		PUT DELETE MKCOL COPY MOVE;
		autoindex		on;
		autoindex_exact_size	off;
		create_full_put_path	on;
		min_delete_depth	7;
	}
}

When I open the http://webdav.domain.com/ link in Nautilus (CentOS 5.7),
I get a popup to enter the username/password and then I get an error
message:
Could not display "http://webdav.domain.com/".
The location is not a folder.

Am I missing something in the configuration? I tested the setup with a
regular index.html file and the security popup shows and accepts my
username/password so not something related to basic auth. However, when
i look into logs, I see this:

2011/12/17 17:45:04 [error] 30059#0: *1 no user/password was provided
for basic authentication, client: 192.168.1.1, server:
webdav.domain.com, request: "HEAD / HTTP/1.1", host:
"webdav.domain.com"
2011/12/17 17:49:39 [error] 30059#0: *2 no user/password was provided
for basic authentication, client: 192.168.1.1, server:
webdav.domain.com, request: "HEAD / HTTP/1.1", host:
"webdav.domain.com"

Every time the request fails, 2 lines are added into logs.

Thank you for your help.

Posted at Nginx Forum: http://forum.nginx.org/read.php?2,220214,220214#msg-220214