The default authentication for phpmyadmin is config, which means you put the username and password in the config.inc.php file. http authentication pops that dialog box and prompts for a username and password. Look in the config.inc.php file in the phpmyadmin directory.
Take a look at the phpmyadmin.sh script, it is a very simple shell script, it will show you exactly what it was trying to do, plus you may see what was causing that error you received before.