Apache2.4 Error : Authentication not configured?

I have installed Apache webserver version 2.4

We have a webserver plugin which is developed in c++ and is deployed on this webserver.
This plugin does the job of authentication and authorization of users.
So basically, when the standard index.html page of the WS is accessed, our plugin will -
1. intercept this request.
2. ask for user credentials for our server(which is developed in java) to validate the username and password -- Performing authentication.
3. Checking if the entered user has access to this resource index.html. -- Perform authorization.
4. Grant/Deny the access.

So, the issue I am facing here with Apache 2.4(only) is -
When I access /index.html, the custom login page appears. On credential acceptance, it shows and "Internal Server Error" on browser.

The plugin logs are alcc clean and do not show any error messages.

The apache error logs show us a message -

[Mon Jul 08 15:35:11.763364 2013] [authz_core:debug] [pid 24209:tid 27] mod_authz_core.c(799): [client 10.180.178.92:59511] AH01626: authorization result of Require valid-user : denied (no authenticated user yet)
[Mon Jul 08 15:35:11.763482 2013] [authz_core:debug] [pid 24209:tid 27] mod_authz_core.c(799): [client 10.180.178.92:59511] AH01626: authorization result of <RequireAny>: denied (no authenticated user yet)

[Mon Jul 08 15:35:11.797278 2013] [core:error] [pid 24209:tid 27] [client 10.180.178.92:59511] AH00027: No authentication done but request not allowed without authentication for /index.html. Authentication not configured?
[Mon Jul 08 15:35:12.110542 2013] [authz_core:debug] [pid 24210:tid 26] mod_authz_core.c(799): [client 10.180.178.92:59512] AH01626: authorization result of Require valid-user : denied (no authenticated user yet)
[Mon Jul 08 15:35:12.110677 2013] [authz_core:debug] [pid 24210:tid 26] mod_authz_core.c(799): [client 10.180.178.92:59512] AH01626: authorization result of <RequireAny>: denied (no authenticated user yet)
[Mon Jul 08 15:35:12.143786 2013] [core:error] [pid 24210:tid 26] [client 10.180.178.92:59512] AH00027: No authentication done but request not allowed without authentication for /favicon.ico. Authentication not configured?

Is there any webserver variable that needs to be set which is causing this issue?

Note-
1. We have included a conf file in httpd.conf which is specific for loading our plugin.
The contents in that include the following -
<LocationMatch "/*">
AuthType "xyz"
Require valid-user
</LocationMatch>
the "xyz" is the AuthType specific to our plugin.

2. This works as it is on previous Apache versions.

Any inputs here would be of great help.

Thanks,
Av.