Don't use auth on the URL that is used for healthcheck.

playbooks/roles/nginx/templates/edx/app/nginx/sites-available/xserver.j2

@@ -23,7 +23,7 @@ server {
   }
 
 
-location @proxy_to_app {
+  location @proxy_to_app {
     proxy_set_header X-Forwarded-Proto $http_x_forwarded_proto;
     proxy_set_header X-Forwarded-Port $http_x_forwarded_port;
     proxy_set_header X-Forwarded-For $http_x_forwarded_for;
@@ -32,4 +32,9 @@ location @proxy_to_app {
     proxy_redirect off;
     proxy_pass http://xserver_app_server;
   }
+
+  # Used for xserver healthcheck
+  location /index.html {
+    try_files $uri @proxy_to_app;
+  }
 }