Outlook constantly asking to logon to the exchange server

I have setup a new SBS 2008 with new computers (Windows 7 Professional). All of the computers are joined to the domain and using Exchange with Outlook 2007. Whenever I open outlook, it asks me for the username and password (never seen this happening before). I can continue typing the password and the window won't go away (See figure 1). Sounds like it is not authenticating correctly. My only option is to "Cancel", however Outlook is still connected to the exchange server. After a while, you can see an error message on the right bottom of the screen as show on Figure 2. If I click on the down arrow (need password), the next screen comes up as shown on figure 3 and all I have to do is click "type exchange password and connect" and it will connect and the window go away. I don't even have to type in the password. This window (Figure 1) asking for the password keeps popping up constantly asking to logonn and even with the right password, won't connect. My option again is to click on "Cancel".

Any suggestions in how to troubleshoot this problem is greatly appreciated. This problem occur in all computers, different usernames. I setup a new server with 6 new computers.

Thank you, Raul
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