NancyFx on IIS and Windows Authentication

1) Yes, you have to tell the IIS module to use Windows Authentication

2) I do not believe so. Although you can do windows auth using OWIN self hosting if you really don't like IIS

Even if you have IIS set to win auth, nancy does not recognize this out of thie box. You can authenticate the current request using the Pipelines.BeforeRequest in the bootstrapper by overriding RequestStartup() and setting the current users, username. The following assumes .NET 4.5

Of course you may want to do standard null checking and what not.

public class User : IUserIdentity
{
    private readonly ClaimsPrincipal claimsPrincipal;

    public User(ClaimsPrincipal claimsPrincipal)
    {
        this.claimsPrincipal = claimsPrincipal;
    }

    public string UserName { get { return claimsPrincipal.Identity.Name; } }
    public IEnumerable<string> Claims { get { return claimsPrincipal.Claims.Select(c => c.ToString()); } }
}
public class Bootstrapper : DefaultNancyBootstrapper
{
    protected override void RequestStartup(TinyIoCContainer container, IPipelines pipelines, NancyContext context)
    {
        pipelines.BeforeRequest += ctx =>
        {
            ctx.CurrentUser = new User(Thread.CurrentPrincipal as ClaimsPrincipal);
            return null;
        };
    }

}