good news everyone!
authentication issues have been solved! there is a new HOTGLUE version available for download at
http://hotglue.org/hotglue-latest.zip you will have to edit config.inc.php and setup your username/password in appropriate fields. there is also a new variable - 'auth_method'. in case you had problems with authentication you shall leave it set to 'basic'.
apparently the problem was that some hosting providers have difficulties digesting the 'digest' method which we used by default. either 'reverse proxy' setup that eats up authentication data or apache with hardwired 'basic' mode. anyhow, 'digest' mode did not work there, that is why we now have a choice of auth_methods.
'digest' is generally more secure and if you can - we advise you to use it. otherwise 'basic' is safe bet for any kind of 'el-cheapo' hosting ;)