Asp.Net core MVC application Windows Authentication in IIS

launchSettings.json file is only used by VS. When you publish your app (or run without VS) launchSettings.json is not being used. When you run with IIS/IISExpress you just need to make sure that your web.config has correct settings. In your case the forwardWindowsAuthToken attribute in the web.config is missing or is set to false. It must be set to true for Windows Authentication to work. A sample web.config before publishing would look like this:

<?xml version="1.0" encoding="utf-8"?>
<configuration>
  <system.webServer>
    <handlers>
      <add name="aspNetCore" path="*" verb="*" modules="AspNetCoreModule" resourceType="Unspecified"/>
    </handlers>
    <aspNetCore processPath="%LAUNCHER_PATH%" arguments="%LAUNCHER_ARGS%" stdoutLogEnabled="false" stdoutLogFile=".\logs\stdout" forwardWindowsAuthToken="true"/>
  </system.webServer>
</configuration>