Multisite authorization error 401

Look carefully at your .htaccess and apache configuration, Your server is intercepting the request. Unless I’m mistaken, I really don’t think this is a WP problem. You might try ServerFault.com and/or your host provider for this one.

You also might want to think about how subdomain are mapped to your site. Chances are, if I understand it correctly, you need to specifically map each subdomain to your site with your hoster (if relevant). For my current host, I also need to set up DNS wildcarding if I don’t want to add each subdomain, and I also need to talk to host tech-support to get them to play nicely with the wildcard.

Good luck