Joseph Durnal: "Most of my Exchange 2007 Outlook Anywhere implementations have just been configured for basic authentication since the client comptuers using it wouldn't be part of a domain."
When working with a non-domain system, OA with NTLM can work fine, as long as the local username and password match the corresponding domain user's credentials.
The password prompting does not appear to be related to the client being a domain member or not. When the prompting starts, all systems have it.
@Guillaume: "Do your users have this checked in their Exchange proxy settings?
Without this checked, Outlook will prompt even with NTLM enabled"
When we got the prompting (after migration to WS2008), we had mutual authentication checked, as before.
As far as I can tell, the problem is related to IIS (/OAB and/or /RPC virtual directories), see my earlier posts. This is 100% reproducable in my environment. Before, with Windows Server 2003, it was working perfectly.
The OA prompting is a really serious issue.
Microsoft should nail this bug as soon as possible.