When I put a document library in a subarea, then try to create a
document workspace for a doc in that library, I'm having issues (I
select "Create Document Workspace" from the pull-down menu for that
document).
The first message I get is fine:
"A new Document Workspace will be created. A copy of this document will
be stored in the new workspace. From the new workspace, you can publish
the document back to its original location.
Name: _____
Location: ______
Do you want to create this Document Workspace?"
However, when I click OK, it asks for login credentials and then denies
access.

I am able to create a document workspace in the same location it shows
in the above message from Outlook (when I create a new message with
attachment). Also, it lets me create document workspace from a document
library located at the root ("Home" area), but none of the other areas
or subareas I create. At last, I have no problem doing this task from
any site I have.

Has anyone encountered this? Am I missing anything in the settings?
I would appreciate it if someone could even tell me if the problem
cannot be replicated on another server (since it would tell me that it's
fixable).