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This happened to me when I got a new notebook last winter, running XP home and Outlook 2000. I can't remember the exact cause of the problem (or, unfortunately, the fix), but it involved deleting some file that was messing things up so that Outlook could write a new passwords file. I DO remember finding the solution by doing a search on the Office tech support site.
Good luck, and sorry I couldn't be of more help...
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