Enabling sticky sessions on a load balancer

Any advise on this one would be greatly appreciated, I’ve been researching all morning and I’m still scratching my head. I started at a new company a few weeks ago, where I’m the only .NET developer as the development was originally done by an outsourcing company and I’ve been asked to research.
My knowledge of the existing system is extremely limited but from what I can gather the situation is as follows.

Why does Windows/Integrated Authentication in IIS not pass user credentials to SSRS and SQL?

Issue:
In ASP.NET 4.0, I use my SSRS 2005 server’s ReportService2005.asmx web service to get a list of reports. Also in .NET, I use Entity Framework to communicate with my MS-SQL 2005 database. When I use Visual Studio Development Server as my web server, calls to SSRS and SQL work fine. But when I switch to IIS 5.1, both SSRS and Entity code produce errors. I use only Windows/Integrated Authentication in IIS.

401 Client ‘Negotiate’, Server ‘Negotiate,NTLM’ When Calling WCF Server to Server

Ok, I’ve read every thread & question I can find with this error and surprisingly have not found a solution. I’m trying to require Windows authentication on my IIS hosted WCF service (.NET 4.0) which, until now, has been optional. I have had a Windows authentication enabled endpoint available on the server for a while with several remote applications successfully using it. I’m now trying to switch our web applications and other server apps that use the WCF service over to this secured endpoint by giving them the exact same client configuration as the working remote clients, but the server apps are receiving a 401 with the message:

ASP.NET MVC Recompilation limit of 15 reached HostingEnvironment initiated shutdown HostingEnvironment caused shutdown

At some point, shortly after a code push, we saw numerous restarts occurring in our web application with no logging indicating an issue whatsoever. So I found this article: http://weblogs.asp.net/scottgu/433194 and we added Application_End logging, which immediately revealed this: