We have just installed the latest Microsoft updates on our SBS 2008 Premium server (KB973917, KB974318, KB970430, KB971739 & KB976325) and restarted the server. We now have an issue with Outlook 2007 (cached mode) continually asking for credentials even though the PC's were logged onto on the LAN, and can access all other LAN resources without being prompted for credentials. Even when the credentials are entered we are prompted for them straight away. If we cancel the credentials window a number of times it does dissapear for sometime and email is availalbe and synched. This is happening to 2 notebooks that are both used on the LAN and as well as with Outlook anywhere (RPC over HTTP). The window asking for credentials does indicate it is trying to connect to our external URL for exchange (which also has an internal DNS entry). Prior to installing the updates listed above we didn't experience this issue. Ideas?

I am sitting at a client site right now with the EXACT same issue with a client's SBS 2008 Standard production server. I installed the updates mentioned above and now everyone is getting the same error you mention. It appears to be related to the updates that I installed on Sunday the 13th of December. No users reported any issues at all last week. Users report no difference outside of the network, however every user reports the same trouble within the LAN. I have done the following so far: -restored Sharepoint Services from a backup of last week - no effect -removed and re-added the EWS website from the SBS Web Applications pool - no effect -ran the Add a Certificate wizard - no effect -checked the certificate authority settings - from what I can tell nothing has changed. -removed the Outlook profile from a client workstation and re-added - no effect. What is interesting about this is when Outlook 2007 performed its auto discovery when setting up the account (from inside the LAN) I get the same errors. This looks like the update messed up the CA somehow... To get this working in a timely manner, I am going to restore from a backup from last week. Until I hear an official response, I will ignore the updates. I hope someone can figure this one out.

*Update* Interestingly enough, I decided to remove the update KB973917 and restart the server - that fixed the multiple login issue with Outlook. However, I still get a certificate error - but not the same certificate error as before. Before, I would get what appeared to be an Outlook Autodiscover certificate error. Now, the error is the same message - but with a different certificate. Getting closer...

*Update*I appear to have solved this problem on my SBS2008 server. In IIS go to SBS web applications (in Windows 2008 I think the following are just under the Default Web Site) - Autodiscover and open Authentication . Right click on Windows Authentication and choose Advanced Settings... . Make sure "Enable Kernel-mode authentication" is selected (It wasn't on my SBS server) and click on OK. Do the same for the RPC, EWS and OAB virtual directories.

*Update*I appear to have solved this problem on my SBS2008 server. In IIS go to SBS web applications (in Windows 2008 I think the following are just under the Default Web Site) - Autodiscover and open Authentication . Right click on Windows Authentication and choose Advanced Settings... . Make sure "Enable Kernel-mode authentication" is selected (It wasn't on my SBS server) and click on OK. Do the same for the RPC, EWS and OAB virtual directories. Thank you so much Davros! That problem had us totally stumped with a lot of annoyed employees!!

Thanks Davros98. This fixed my problem perfectly.

The Official SBS Blog : Outlook 2007 Credential Prompts in Small Business Server 2008: http://blogs.technet.com/sbs/archive/2010/02/16/outlook-2007-credential-prompts-in-small-business-server-2008.aspx

Davros, you're the man!!! Finally, after 7 hours trying to figure out what could be the problem and searching on a bunch of useless newsgroups, I finally stepped on this one and found the answer... I'll be able to go to sleep tonight! What a relief! Thx! Phil