SharePoint 2010 co-authoring in MS Word not working?

Hello, I am a member of a SharePoint Enterprise 2010 group and recently a co-worker and I installed Office 2010 on our machines to explore the co-authoring features through the 'document library' web-part.  When the second user attempted to use the file he was prompted that the file was in use and he could open only a read-only version or edit the document and update changes when the other uses closes the file.  Could anyone provide me advice on why this was happening?  My impression was that co-authoring was enabled 'out of the box'.  If this is an administrators issue could someone provide me some guidance or good questions to ask as this is a recent deployment.

Thanks,
Bev
BevosAsked:
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Jamie McAllister MVPSharePoint ConsultantCommented:
Usually this is because Require Checkout is still enabled.

Here are all the things to check;

http://technet.microsoft.com/en-us/library/ff718246.aspx
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PaulD77Commented:
First try this on the library...
enable versioning

Browse to the document library you want to configure.

In the toolbar, under Library Tools, click Library.

In the toolbar, click Library Settings.

In General Settings, click Versioning Settings.

In Document Version History, select Create major versions.

To specify a version retention limit, select Keep the following number of major versions and in the text box, type the number of versions.

Also....

Issues with co-authoring documents
If you cannot co-author a Word document or PowerPoint presentation, then one or more of the following reasons may be the cause:

The file is using Information Rights Management (IRM) or Digital Rights Management (DRM).
The file is checked out.
The file is encrypted.
The file format is not supported. Only .docx and .pptx file formats are supported. In most cases, you can save the unsupported file format in the supported format.
The file is marked as final. The file owner has decided to stop the process of editing or co-authoring the file and the file is now read-only.
Certain Microsoft Office group policy settings prevent co-authoring including the following: Disable Automerge Client Policy, Disable Co-Authoring Server Policy, and Disable Co-Authoring Client Policy.
The file contains an ActiveX controls.
The file contains certain objects that cannot be uniquely identified, such as an OLE object, a SmartArt graphic, chart, or Ink object.
The Word document uses master documents with subdocuments, contains HTML Framesets, or is being published as a blog.
The Word document does not have the Store random numbers to improve Combine accuracy check box selected. (On the ribbon, click the the File tab, click Options to display the Word Options dialog box, click Trust Center, click Trust Center Settings to display the Trust Center dialog box, click Privacy Options, and then under the Document-specific settings section, make sure the Store random numbers to improve Combine accuracy check box is selected.)
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rebejonesCommented:
When co-authoring a file do not check the file out just open and edit. Each person working on the file cannot have it checked out see the below article. http://office.microsoft.com/en-us/sharepoint-server-help/document-collaboration-and-co-authoring-HA101812148.aspx
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