I cant really solve the issue but I can add some info that might help someone else with this.. I have been trying to move hosting providers and am using the 1.6 build as well. Both have MySQL 5 setup. The one I'm coming from tells me its 5.0 and the one I'm trying to move to says Version: 5.0.45. Both Have PHP as well, "ServerFrom" has version 5.x (whatever that means) and "ServerTo" has version 5.2.12. Ive done fresh installs as well as porting over all of the files from one server to the other and editing the config file to reflect the new database then exporting the database from the "ServerFrom" and importing it into "ServerTo". Even with this exact data copy it still will not allow me to get past the authentication page.
Id does however login Ive noticed because it will tell you it was a bad username and password if you deliberately enter it in wrong but goes back to the "Authentication Requited" screen if you enter it in correctly.
There has got to be something different with the slight differing versions of PHP or MySQL that are causing this issue.