I wanted to post this because I didn't find information on it when I was looking for it and maybe someone else will have the same issue. I'd been trying to download Sharepoint 2007 using the File Transfer Manager and kept getting an error, "Unable to Open File on Client". I checked multiple times to be certain there were no permissions issues, tried different accounts, different browsers, everything. I removed the file trasfer manager more than a couple of times and it ended up that in the end, the fix was Protected Mode in IE. I unchecked the box and voila, download is running. I was troubleshooting with ProcMon before and didn't get the idea to check that setting until the Steam client wouldn't update this afternoon.

Hysonmb -That's a valuable tip.... Something worth checking/remembering next time someone comes up with the same issue. It is kind of odd though - that many people are NOT having any issue with that while others are... Very inconsistent...

Thanks for the advice - still doesn't work for me though. Will post back here if i get it working.