This has been baffling the team for quite some time. Outlook 2007 on Windows 7 will prompt for password after long periods of inactivity like overnight or lunch. The box is similar to Outlook Anywhere login.
There is definitely nothing wrong with Outlook and the environment as it has been use for nearly a year. Poking around the Power Settings in Control Panel other than sleeping the CPU, did not show anything.
Since Google said it might be due to network connectivity, I decided to have a look in the network adapter settings. Lo and behold, there is a power management tab. Unchecked ‘Can shutdown adapter to conserve power’ . No more prompts.
In summary, the out of box config for Windows 7 will sleep the network adapter if there is no outgoing activity, causing a prompt for authentication.
Update: I have seen a HP with Win XP with this problem. Similarly, I unchecked the power management and services resumed.
Update 3 May 11 – You must restart / reboot the computer for this setting to be effective.