Frankly this is absurd. There must be a consistent solution to this problem. Not one that works depending on the configuration, or, in my case doesn't.
If anyone has suggestions for making these passwords stick other than the ones presented here:
http://systembash.com/content/outlook-20032007-wont-save-hosted-exchange-password/
Or any of the ones suggested in the archived Technet article, I'd appreciate hearing about them. In my case we're trying to connect clients to an Exchange 2010 server using Outlook 2007, 2010 running XP Pro and Windows 7.