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Troubleshoot an Outlook 2007 password prompt during an Exchange 2007 migration

If you are being prompted for a password in Microsoft Outlook 2007, you may have to migrate the public folder tree into the Exchange 2007 environment.

We're running Exchange Server 2007 on Windows Server 2008, but only a few mailboxes have been migrated from Exchange 2003 to Exchange 2007. Do you know why an Outlook 2007 user with a migrated mailbox would be prompted for a username and password, even when connected to the local area network (LAN)? Since the computer belongs to the domain, shouldn't the proper credentials be passed automatically?
This can occur early during migrations from Exchange Server 2003 to Exchange 2007, when the user's mailbox server does not contain a public folder store. When the public folder tree is replicated to the Exchange Server 2007 environment, the password prompting should stop.

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