404 error when adding password protection to directory

Hello i puted proper code into ngix conf for password protection of
directory and when i load protected directory i getting 404 error same
as person on this url:
http://forum.slicehost.com/comments.php?DiscussionID=1609
Any idea why is that happening?Maybe there is needed more lines to be
added?
I have ngix latest stable version on cent os5 installed
Here is how my entire conf file for domain looks:
server {
access_log off;

error_log logs/vhost-error_log warn;
listen 80;
server_name domain.net www.domain.net;

uncomment location below to make nginx serve static files instead of

Apache

!WARNING!

it will make the bandwidth accounting incorrect as these files won’t

be logged!
#location ~*
.(gif|jpg|jpeg|png|wmv|avi|mpg|mpeg|mp4|htm|html|js|css)$ {

root /home/domaindir/public_html;

#}
location / {
client_max_body_size 10m;
client_body_buffer_size 128k;
location ^~ /st/admin {
auth_basic “RESTRICTED ACCESS”;
auth_basic_user_file
/home/domaindir/public_html/st/admin/.htpasswd;
}
proxy_send_timeout 90;
proxy_read_timeout 90;

proxy_buffer_size 4k;

you can increase proxy_buffers here to suppress "an upstream

response

is buffered to a temporary file" warning

proxy_buffers 16 32k;
proxy_busy_buffers_size 64k;
proxy_temp_file_write_size 64k;

proxy_connect_timeout 30s;

proxy_redirect http://www.domain.net:81 http://www.domain.net;
proxy_redirect http://domain.net:81 http://domain.net;

proxy_pass http://ip_adress:81/;

proxy_set_header Host $host;
proxy_set_header X-Real-IP $remote_addr;
proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
}
}