Windows "Loopback bug" when using a FQDN

We just got our new TFS 2010 hardware! Unfortunately, my smile was quickly brought to its knees by the "loopback bug" where you can access a IIS site (in our case it's a Share Point site running under IIS 7.5) via fully qualified domain name (FQDN) from a client machine, but can't use the FQDN on the server looping back to the server. When trying to use the FQDN locally on the server, we continually get the username/password prompt.

Here is the work around if you loose a day on this like I did. Option #1 worked for us. Thanks for the post at Server Fault for reminding me.