In case you haven't looked in a while, WebDAV modules are included with Apache 2 and 2.2. See for example http://www.serverwatch.com/tutorials/article.php/2176771 for an installation overview.
This will work great for Mac clients (from "Finder" hit apple-k to connect as a remote web folder) with HTTPD basic authentication, but they will fail for Windows XP clients (either mapping as a drive or adding network location). The reason, it turns out, is that Windows is actually working correctly: it won't do Basic Auth over an insecure connection.
To solve this, use SSL. There's an overview of the problem and variuos solutions at http://ulihansen.kicks-ass.net/aero/webdav/. See for example http://www.vanemery.com/Linux/Apache/apache-SSL.html for some Apache + SSL instructions.
One Final Trick: Windows clients seem to have a problem with the trailing "/", so in your Apache httpd.conf file, use something like
for your WebDAV folder name.