Sometimes when working in the CRM Client for Outlook and if Internet Explorer 7 is installed a dialog box appears asking the user to login. Even if the user enters a correct username and password the dialog box reappears. Clicking cancel on the dialog box each time eventually sorts the situation.
To prevent the dialog box appearing change the following registry key:
from 1 to 0.
This article http://support.microsoft.com/kb/934243 has more details.