There are a couple of issues that could cause this. First ensure you have at least Exchange 2007 SP2 installed, there was also a security update in November that caused another issue.
Check out optios 1 and 3 in my article here:
http://www.experts-exchange.com/articles/Software/Server_Software/Email_Servers/Exchange/Outlook-continually-prompting-for-username-and-password.html