We currently are chasing down an issue with opening word documents in SharePoint 2010. This is an intranet solution that is set to anonymous access. What occurs is when a user selects a document it prompts the user if they want to edit and/or read a document(Office Web apps disabled for this library) They get challenged with a authentication prompt. We have isolated to the problem being experienced by Windows XP users. All other clients(Windows 7 eg) open documents fine with no challenge which is intended behavior. What is interesting is that they can simply hit cancel on the authentication pop up and the document will open. What is causing this issue for XP?