No longer prompted for login/password after first, failed attempt (no replies)

Hello

I just installed Nginx 1.2.1 for the first time on an ARM appliance, and am trying to learn how to secure a folder by following some articles:

http://wiki.nginx.org/HttpAuthBasicModule
http://kbeezie.com/protecting-folders-with-nginx/
http://nginxlibrary.com/password-protect-a-directory/

After creating a new password and adding the "username:password" line to /etc/nginx/.htpassword, editing etc/nginx/sites-available/default accordingly and securing the file with "chown root:nogroup .htpasswd ; chmod 640 .htpasswd"... I restarted Nginx, and was indeed prompted for a login/password once when accessing the protected folder... but only once: After typing a wrong password just for a test, the browser always displays the Err 500 screen without prompting me anew, ie. I can no longer type a login/password :-/

Neither restarting Nginx, closing/reopening a window in Chrome, not clearing Chrome's cache solves the issue. Also, Chrome didn't save the login/password.

Why doesn't Nginx show the login/password dialog after a first failed attempt?

Thanks for any help.