Further confusion based on your reply....
If I add the FQDN of the web interface server into Trusted Sites Zone, but leave the Logon option set to "Automatic Logon only in Intranet Zone", then I get the browser popup for username/password and can log in as any user which is what I want.
If I set the Logon option to "Automatic logon with current user name and password" it logs me on as the user I am logged into Windows as (as you would expect).
If I remove the FQDN from Trusted Sites Zone, the popup username/password appears, but I then get the "Access is denied" and the Sign In page....
Thanks