FTP access with IE7 is read only inside office, but works correctly from outside office

I have a new client that I just installed an FTP server based on ProFTPd running under Centos on a machine on their local LAN. We opened ports in their firewall to allow outside access so their clients (after requesting a login) could upload files to be printed. The system work great from the Internet and allows each client to only see their own directrories and have full control over their own files using both IE 6 and IE 7 as tested. The problem comes from the users inside the office. This is a 5 machine workgroup peer to peer network that is a mix of Vista and XP machiones, all of which are running IE 7. When I open the site in IE 7 on ANY of their machines, I get the expected HTML formated listing with the instructions to "Click Page, then Open in Windows Explorer" to upload files. When I do that I get an error message that says "The FTP Proxy can only open in Read Only Mode". There is no FTP Proxy that I can find on these machines. They have next to no configuration on them. No firewalls beyond Windows and they are running AVG Freeware 8, so we are not being interferred with by Norton or Symantec. In addition, accessing the FTP server inside the office is REALLY slow (20-30 seconds to get a response). Outside the office, it's 3-5 at most. I have compared their browser settings with mine and haven't found anything different. Both are what is generically set when IE 7 is installed.

Normally the problems are the through the firewall stuff, not local to the network. This is driving me nuts. Any clues on where else to look?

    markh