I noticed this question a couple of days late, but I feel that I can add some insight. I hope this can be helpful towards your RESTful venture.
Point 1: Am I understanding it right?
You understood right. That is a correct representation of a RESTful architecture. You may find the following matrix from Wikipedia very helpful in defining your nouns and verbs:
When dealing with a Collection URI like: http://example.com/resources/
GET: List the members of the collection, complete with their member URIs for further navigation. For example, list all the cars for sale.
PUT: Meaning defined as "replace the entire collection with another collection".
POST: Create a new entry in the collection where the ID is assigned automatically by the collection. The ID created is usually included as part of the data returned by this operation.
DELETE: Meaning defined as "delete the entire collection".
When dealing with a Member URI like: http://example.com/resources/7HOU57Y
GET: Retrieve a representation of the addressed member of the collection expressed in an appropriate MIME type.
PUT: Update the addressed member of the collection or create it with the specified ID.
POST: Treats the addressed member as a collection in its own right and creates a new subordinate of it.
DELETE: Delete the addressed member of the collection.
Point 2: I need more verbs
In general, when you think you need more verbs, it may actually mean that your resources need to be re-identified. Remember that in REST you are always acting on a resource, or on a collection of resources. What you choose as the resource is quite important for your API definition.
Activate/Deactivate Login: If you are creating a new session, then you may want to consider "the session" as the resource. To create a new session, use POST to http://example.com/sessions/ with the credentials in the body. To expire it use PUT or a DELETE (maybe depending on whether you intend to keep a session history) to http://example.com/sessions/SESSION_ID.
Change Password: This time the resource is "the user". You would need a PUT to http://example.com/users/USER_ID with the old and new passwords in the body. You are acting on "the user" resource, and a change password is simply an update request. It's quite similar to the UPDATE statement in a relational database.
My instinct would be to do a GET call
to a URL like
/api/users/1/activate_login
This goes against a very core REST principle: The correct usage of HTTP verbs. Any GET request should never leave any side effect.
For example, a GET request should never create a session on the database, return a cookie with a new Session ID, or leave any residue on the server. The GET verb is like the SELECT statement in a database engine. Remember that the response to any request with the GET verb should be cache-able when requested with the same parameters, just like when you request a static web page.
Point 3: How to return error messages and codes
Consider the 4xx or 5xx HTTP status codes as error categories. You can elaborate the error in the body.
Failed to Connect to Database: / Incorrect Database Login: In general you should use a 500 error for these types of errors. This is a server-side error. The client did nothing wrong. 500 errors are normally considered "retryable". i.e. the client can retry the same exact request, and expect it to succeed once the server's troubles are resolved. Specify the details in the body, so that the client will be able to provide some context to us humans.
The other category of errors would be the 4xx family, which in general indicate that the client did something wrong. In particular, this category of errors normally indicate to the client that there is no need to retry the request as it is, because it will continue to fail permanently. i.e. the client needs to change something before retrying this request. For example, "Resource not found" (HTTP 404) or "Malformed Request" (HTTP 400) errors would fall in this category.
Point 4: How to do authentication
As pointed out in point 1, instead of authenticating a user, you may want to think about creating a session. You will be returned a new "Session ID", along with the appropriate HTTP status code (200: Access Granted or 403: Access Denied).
You will then be asking your RESTful server: "Can you GET me the resource for this Session ID?".
There is no authenticated mode - REST is stateless: You create a session, you ask the server to give you resources using this Session ID as a parameter, and on logout you drop or expire the session.
Best Answer
Based upon the information provided, I doubt this is a programming error. Can you get access to the IIS Manager interface on the server hosting the SharePoint site? If so, check the valid authentication technologies permitted. Are anonymous connections allowed? Is Windows Integrated Authentication enabled? HTTP Basic auth? Ask your infrastructure/SharePoint people about the possibility of a double-hop (proxy). If so, that might work too, but it's a pain to setup (Kerberos delegation). The NetworkCredentials class appears to support all of the standard authentication schemes supported by IIS (except for forms):
http://msdn.microsoft.com/en-us/library/system.net.networkcredential(VS.80).aspx
You might need to have the infrastructure people set SPNs for the SharePoint web front end:
http://support.microsoft.com/kb/929650
I advise against changing anything via IIS Manager, however. Have your SharePoint Admin make the changes to the authentication techs permitted for the site via SharePoint Central Administration.
Regards, Sam