Microsoft released a patch in December for Microsoft Outlook that caused serious issues with Outlook’s responsiveness, switching folders was very slow, auto-archive broke, and other possible errors. They pulled the update a few days later, then re-released it on January 11th.
This new version of the patch will now cause many people to have continuous password prompts. Some computers can’t get into Outlook at all, some can hit cancel and get in, while others have to enter domain\username to get it to work. I tried to work in IIS and get permissions to a point where Outlook would not complain, but then that would break other items. Finally we just decided that this update was still not primetime. We removed it from those networks that got it installed, and have advised all customers to not install it.
Common threads are Exchange 2007, SBS 2008, Outlook 2007 & 2010