What I am trying to do is use a gateway that is password protected. If you
would navigate to the gateway URL in your browser you would be prompted with
the windows password box to enter your username and password to access the
folder. When I attempt to flash remote to this ASP.NET application I get a
cannot reach page error because of the password block.. I need a way around
this without removing the password which protects the data. Suggestions?

Have you checked out this?

http://livedocs.macromedia.com/flashremoting/mx2004/using_flash_remoting/wwhelp/wwhimpl/js/html/wwhelp.htm