TortoiseSVN has an excellent document that describes setting up a Subversion server on Windows. See the section on SSPI authentication in the link below for more information.
An important part of the configuration is the line: SSPIOfferBasic On. Without this line, browsers that support SSPI will prompt for the user's credentials, but clients that do not suppport SSPI, such as Subversion, will not prompt. (The current release of Neon - Subversion's HTTP library - handles only basic authentication.) Because the client never asks for credentials, any action that requires authentication will fail. Adding this line tells mod_auth_sspi to use basic authentication with the client, but to use the Windows domain controller to authenticate the credentials.