I've seen several questions regarding this type of an issue but I cannot find a solution that seems to work. I have a user on our domain who cannot open the public folders from her logon. She is using Outlook 2007. I had her log onto a different PC that also has Outllook 2007 installed and she still could not open public folders from that PC either. I confirmed that public folders open for other users in the organization.
I should be clear about what I mean by "opening public folders". I realize that there are permissions set on each subfolder in the public folder hierarchy, but my issue is that this user never gets this far. When she clicks on the "plus" sign to the left of "Public Folders" to try to view the subfolders, she gets this error: "Cannot Expand the folder. The set of folders cannot be opened. The attempt to log on to Microsoft Exchange has failed". She has no problems in any other part of Outlook. She is running Windows 7 and the other, "test" PC where I had her logon is running XP.
If she logs on as herself to OWA (webmail), she can view the public folders with no issues.
Let me know if you need more info.