WebDAV is not possible on your server due to the membership provider not being able to retrieve passwords. This is a new default setting since DNN 7.1. We're working on a solution.

I would like to use this feature, is there any news on when it may be available?

After many back and forths with DNN Corp, the door has been closed on this. Basically you need to choose between the default hashed passwords but no WebDAV or encrypted passwords with WebDAV. The latter being less secure of course.

Peter