There are two different login problems with lotus notes websites.
1) The user has forgotten their password or user id or does not have a user id.
Use form: $$ReturnAuthenticationFailure
Put up a message to say the userid is incorrect, with a link to the register page, or the forgotten password link and the try again link.
2) The user has logge din but does not have access to that database, document or functionality.
Use form $$ReturnAuthorizationFailure
Put up a message to acknowledge they have logged in as Username. This is useful as they know they have their paswword correct!
Tell them they do not have access to the document, database or functionality.
Put up a link to an email address to ask for access.
For both forms: tick "Available to public access users".
The database should have "Default: whatever access, eg read or no access and tick Read public documents.
The database should have "Anonymous: whatever access, eg read or no access and tick Read public documents.
If you do this and use the option "Launch first document in view" for web launching then check out this:
Error 500 HTTP Web Server: Illegal Arguments Exception