digest returns can not find user file

Hello,
I've got an ssl protected virtual host that i'd like to secure access to
using digest authentication. My config snipet for the virtual host is below.
To generate the digest password file i used:

htdigest -c "/usr/local/etc/apache2/passwordfilename" REALM user

i entered a password for the user and confirmed that the file was created.
As of now the permissions are 640 so the group running apache shouldn't have
an issue reading it. In the file there's the username:REALM:Digest hash
however when i atempt to access the page i am unable to pull up the index
page there. Take out the digest options and it works fine, in my httpd-error
log i am seeing critical error, can not validate user, no user file. I've
done an apachectl -t and the syntax is ok, restarted apache. Any help
appreciated.
Thanks.
Dave.

ssl config:
<IfDefine SSL>
<VirtualHost 192.168.r50.r83:443>
ServerName www.example.com
DocumentRoot "/usr/local/www/ssldata"
SSLEngine on
SSLCertificateFile /usr/local/etc/apache2/ssl/server.crt
SSLCertificateKeyFile /usr/local/etc/apache2/ssl/server.key
SSLCACertificateFile /usr/local/etc/apache2/ssl/ca-cert.pem
<Directory "/usr/local/www/ssldata">
Options Indexes FollowSymLinks
AllowOverride None
Order Allow,Deny
Allow from All
AuthType Digest
AuthName REALM
AuthUserFile "/usr/local/etc/apache2/user.htpasswd"
require valid-user
</Directory>
</VirtualHost>
</IfDefine>