Can't connect project pro to web access

[Chip]

OS: Windows 2000
App: Project Server 2002
App: Project Professional.
Server Name: Project

When setting up my initial project in Project professional:
URL: http://project/projectserver

Error: Unexpected server response

I then click on view and get a web page display:

The server at 'http://project/projectserver' returned the
following error to Microsoft Project
You are not authorized to view this page
You do not have permission to view this directory or page
using the credentials you supplied.

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Please try the following:

Click the Refresh button to try again with different
credentials.
If you believe you should be able to view this directory
or page, please contact the Web site administrator by
using the e-mail address or phone number listed on the
file:// home page.
HTTP 401.1 - Unauthorized: Logon Failed
Internet Information Services

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Technical Information (for support personnel)

More information:
Microsoft Support

I am able to access the Project server from my browser by
entering the same URL. (http://project/projectserver)

I have accounts setup in Windows and in project server but
still am unable to get a login when using Project
Professional.

Any help would be greatly appreciated.

Chip