htaccess problem

If I access my web page with just the ip address such as,
http://123.123.123.123
I only get prompted once for the user id and password.

If I access the page by the domain name such as,
www.server.host.com
it will prompt me for the user id and password then
after I enter it another user id and password box will
open up. After entering the user id and password the
second time it will let me in.

What is the differance between entering the ip address
as compared to the domain name?

I have been to the apache web site;
http://www.apache.org/docs/misc/FAQ.html#prompted-twice
but still can't seem to get it working.

I have a Slackware 9.0 server with Apache 1.3.27
the following is in the httpd.conf.

<Directory "/var/www/htdocs">
Options Indexes FollowSymLinks MultiViews
AllowOverride All
Order allow,deny
Allow from all
AuthUserFile /path-to-passwords/passwords
AuthGroupFile /dev/null
AuthName ByPassword
AuthType Basic
<Limit GET>
require valid-user
</Limit>
</Directory>

and I have tried all of the following in httpd.conf:
ServerName server-name.mydomain.com
ServerName www.server-name.mydomain.com
and UseCanonicalName Off

Thanks
Chip