The original version of Microsoft KB2412171 was released on December 14 and caused a number of problems for Outlook 2007 users. It was pulled two days later. See post on The Microsoft Office Blog
On January 11, Microsoft released a new version of KB2412171. This update is also causing problems. Today, we had to uninstall it from all Outlook 2007 clients for customers using it with Exchange in a Domain environment.
The problem: Upon opening Outlook 2007, clients are asked to authenticate with a username and password. Of course that’s not supposed to happen when your computer is part of a domain and you have logged on successfully. Even if you enter a valid username and password and check the box “Remember My Password”, you are repeatedly asked to re-enter your credentials.
Uninstall KB2412171 and everything is back to normal. This update is for Outlook 2007 only. Outlook 2003 and 2010 are unaffected.
More info will be posted here when available.
More of the same with KB2509470 which was recalled by Microsoft and will be rereleased shortly.
Update: See Chris’ post here for the resolution.