Today I was attempting to create a new list on the Public side of a SharePoint 2007 install. For some reason, I kept getting prompted for credentials even though everything was set to anonymous. Turns out my solution was here. The solution goes likes this:

To resolve this issue, use the Stadm.exe command-line tool to disable the lockdown feature. To do this, follow these steps:

1. 1) Click Start, click Run, type cmd in the Open box, and then click OK.
2. 2) Type the following lines at the command prompt. Press ENTER after each line.
3. cd /d %commonprogramfiles%Microsoft SharedWeb Server Extensions12Bin
4. stsadm -o deactivatefeature -url http://ServerName -filename ViewFormPagesLockDownfeature.xml
5. 3) Type exit to exit the command prompt.

Note After you run this command-line tool against your site, you must toggle the Site Settings advanced permissions to turn off Anonymous access. Then, turn on Anonymous access again. You must do this for the command to take effect on content that exists in the site.

I had to do this twice to actually get it to work but it did, finally. More information about anonymous, forms pages, and the lockdown feature can be found here.