Ok, i did some more digging and found the following:
I can manually create a md5 password for apache using the htdigest command.
I can successfuly authenticate with this generated password.
So I know that my apache's digest authentication is working.
If I compare the md5 sum of the htdigest generated password to the md5 sum of the board generated password they don't match. Hence I get the mismatch error in my apache logs.
Does this mean there are different methods for creating a md5 sum for passwords?
Or better yet why does the board create a different md5 sum than htdigest command and what can i possibly do about it

Thanks for your help