problem with apache and SUSE 7.2

This is the message I get in error log file when I try to use /etc/httpd/access.conf file with Apache 1.3.19 on SuSe Linux 7.2. Server clearly finds /etc/httpd/access.conf file and reads it contents, I get dialog box asking to enter login name and password, but after I enter correct login/password I always get 401 error saying that Authorization is required. Content of the /etc/httpd/access.conf is also fine, since it worked fine on older version of Apache. Does anyone any ideas?. Thank you very much