How to fix: I am prompted to login when attempting to open an Office document hosted in SharePoint 2007

This is caused by the security settings on the user’s computer.  There are two ways to fix this.

1) The next time you log on, be sure to select “Remember my password”.  The user will never be prompted for the password again.
2) Make your website a Trusted Site in Internet Explorer:
• To make the portal a Trusted Site:
1.  Open Internet Explorer
2.  Log on to the website home page
3.  On the Internet Explorer tool bar, select the “Tools” menu, then select “Internet Options”.
4.  Select the “Security” and then “Trusted Sites” tab
5.  Select the “Sites” button
6.  Add the website address in the “Add this website to the zone” box. Click “Add” and “Close”.
When you try to open a document again, you will be able to view it correctly.

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