I have set up a new SBS 2008 server (including Exchange 2007). The clients are running Outlook 2007.
All clients have an issue where Outlook periodically prompts for login to access remote.mydomain.com. When correct credentials are entered, the dialog comes back straight away (ie. authentication is not successful). Apart from this, Outlook is connected to the Exchange and receiving emails, so if I cancel the login box, so Outlook works ok if I cancel the login box.
The DNS is correctly set up and from the client, remote.mydomain.com resolves to the internal IP address of the server.
In Outlook, I have tried changing the authentication method to all values without luck.
Something else that I found strange and that may be linked to the issue is: Exchange 2007 uses auto-discovery and the file is accessed via https://remote.mydomain.com/autodiscover/autodiscover.xml. However, when I try to access the URL, from a client or from the server itself, I get a prompt for login and I am unable to authenticate (the login prompt comes back after correct credentials have been entered).
So my guess is that Outlook may be trying to access the auto-discover file and failing authenticating.
I have checked the authentication settings in IIS and they seem ok to me (Basic Authentication is enabled).