Outlook 2007 keeps disconnecting from Exchange Server

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Hi, we have about 20 users in our office connected into Exchange server via Outlook 2007 using thier active directory details.
On each users Outlook, I have ticked the "Connect to Microsoft Exchange using HTTP" box in the Connection tab of the Email Account settings which I was told removes the need for users to enter any login details when they open Outlook because they are already logged into the Domain which is tied into thier user mailbox.
The vast majority of the time this works perfectly and the users never need to enter thier login details when opening Outlook and connecting to the Exchange server to retrieve thier mailbox, however sometimes the login box appears over and over again on a single machine and even when they enter the correct details it keeps on popping up and not connecting to Exchange. After a restart or recreating the email account in control panel > mail settings this usually works again but it isn't exactly ideal.

Has any body got any ideas why this is happening or any ideas on how to fix it?

I think it might be that the user is losing connectivity to the Exchange server but both the users laptop and Exchange server are good spec and the network and domain is accesible from the users laptop while Outlook is asking for logon.
 
Set it up like this and see if that corrects the problem.

Im not sure how that network is setup but on my network, this is not checked, if the users login credentials match whats on the network, they wont be prompted for username/password when accessing Outlook. Once the password expires, locked out, etc then it will.

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