-Word 2003
-MOSS (no SP1 yet, the DST bug is biting us)

root site "SPServer"
-SubSite "site1" - NO INHERIT permissions
-Document Library "DocLib" - NO INHERIT permissions
-Subfolder of DocLib called "test1" - NO INHERIT permissions
-Subfolder of test1 called "test2" - NO INHERIT permissions
-document in test2 callled "testdoc.doc" - YES INHERIT permissions


"TestUser" has:
-readonly on SPServer
-NO OTHER permissions

Steps:

1. Give TestUser contribute access to folder "test2"

Results:
1A. Testuser is auto given LimitedAccess to site1, DocLib, and test1
1B. TestUser can open testdoc.doc from link sent through email
1C. TestUser gets a login prompt attempting to save testdoc.doc.  If
TestUser hits escape, the prompt goes away and the doc is saved.  If
TestUser enters credentials he is prompted 3 times, and then the doc
is saved (once).

2. Give TestUser view-only access to test1

Results:
2A. same as 1A/B/C

3. Remove viewonly (leaving "limited") to test1.  Give TestUser
view-only access to DocLib

Results:
3A. Everything works as expected.



Note: Same steps run from another computer running word 2007 results
in no issues.

Any ideas/office hotfixes/?


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