Repeated Sharepoint Credentials Box when opening Office Doc in IE on Windows 7.

We have a Sharepoint server at work used to share documents via WebDav. It is authenticated via the Active Directory, using the current logged on user credentials. It has always been the case, on IE on XP that you needed to carry out the following steps to access files without seeing an annoying credentials box:

1. Add the Sharepoint host to Trusted Sites in IE.
2.a.  From the security tab, select "custom level" for Trusted Sites.
2.b.  Scroll to bottom of options and select "Automatic Logon with current username and password".

However since moving to W7, this continues to work but I keep getting prompted for my credentials after opening an Office Document. This is annoying as repeatedly typing the correct password has no effect, and only by clicking "cancel" does the document download.

Seem this is a bug, due to the fact that:

1. We don't have a proxy, i.e. MS ISA Server.
2. We are using a fully qualified domain name.

Don't think I understand how MS missed this state of affairs as valid use case / test case, but anyhow.

There is hotfix for Vista to fix this, however the patch does not work on Window 7. However following the manual steps in the article below fixed the problem and worked for me (editing the registry):

http://support.microsoft.com/?id=943280