I just update 2 computers that have Vista and Outlook 2007 with 6 critical Microsoft updates today (Jan 9th 2008). One worked fine after the updates and the 2nd computer had the exact same problem as listed here (Outlook 2007 would not save the email passwords despite the box being "checked" to save passwords). And it had been working fine for 1 year before the update.
A quick Google search brought me to this site (God, I love Google and the internet!!)
In any case I followed the procedure outlined here by Ronnie Vernon (Many Thanks!!)
Closed down Outlook 2007.
Went to C:\users\(username)\AppData\Roaming\Microsoft\Protect.
Delete the "Protect" folder.
Restarted Windows Vista.
Restarted Outlook 2007.
Re-inputted all 10 passwords (this computer has 10 email accounts)
Hit Send/Receive button
VoilĂ ! Everything is working correctly again!
Many Thanks to Ronnie and this forum for all your wisdom!
Best Regards,
SoCalGuy-99