This probably isn't very helpful... but I've heard of something like this before. The user was using IE 5; switching to IE 6 made the problem go away, though no explanation was ever found (of course, once things were working, the Powers That Be stopped looking for an explanation).
I guess it's called "Internet Exploder" for a reason... :-)
great! well, this seems the reverse - everything worked well, until recently - i haven't polled my users on who might be able to log on using IE, if any. i've been seeing it on my machine with IE 7, but also with IE 6 on another machine.