Outlook prompts for password? Maybe it’s your LMCompatabilityLevel.
I’ve spent time off and on over months trying to track down why certain Office 2013 apps (Lync and Outlook) would unexpectedly prompt for passwords, at startup, or sometimes in the middle of normal operation. I’d looked at all sorts of things, internal and external authentication types, kernel mode authentication in IIS, whether there was a saved password, was the client loading a shared mailbox? None of these were the cause.
I finally stumbled upon an 2003 era document http://support.microsoft.com/kb/820281 which indicates that there can be a prompt if the LMCompatabilityLevel on the workstation is set below 2. Low and behold…
The workstations had this set in local group policy, so simply deleting the key restored the default of using LM level 3. As a more global, and permanent fix, the setting could be applied via Domain Group Policy.
Lync had been attempting to grab HTTP resources via a web proxy, and failing to pass credentials to it. Likewise Outlook was passing LANMAN instead of NTLM or NTLMv2 and failing. I’d looked at the traffic in Wireshark and used Outlook logging, but it wasn’t apparent in either case that this was the problem.