Does SPS 2003 allow users to check out the document, save it to their
hard drive, make modifications and then check it back in with the
changes? I don't see where you do this?

I see that you can edit  the file online and then save it back to the
document library but what happened if I need to take a copy on my laptop
to make changes and then check it back in at a later time. Right now
during check in, there's no option to browse to your hard drive to get
that copy.

Also, has anybody noticed that when uploading any other types of
document, i.e., txt files, there's no way to edit and check the file
back in.

Any advice?

I don't see any problem doing this. Check a document  into a document
library (either in the portal or a site) and hover over the name. A
dropdown list should appear then click  on the arrow to the right to
bring up the menu. It should have these options:

View Properties
Edit Properties
Delete
---
Check Out
Version History
---
Add to My Links
Submit to Portal Area
---
Alert Me
Discuss
Create Document Workspace

(your options may vary depending on how you have your portal
configured). Maybe you don't have versioning enabled in that document
library?

What I'm trying to do is save the file to my laptop, make modifications
to it, then check it back in. But when I select Check In in the menu,
there's no browse button that will allow me to check the document  that
is on my laptop back into the document library.

This issue was brought up because the managers would like to take the
copies with them to make changes when they are on a plane.

Any recommendations?

A couple of things. First are you talking about checking in/out from
something like Microsoft Word or the browser? Second, do you get the
Check Out/Version History menu option as I outlined in my first message?
If not then you might not have versioning turned on in that document
library.

As for the process of editing/checking documents  in and out, SPS seems
to modify the menu and add the appropriate program if it recognizes the
filetype. I uploaded a .doc, .vsd (visio) and .txt file and everything
but the text file have an additional menu item saying "Edit in xxx"
where xxx is the associated program even though .txt files are
associated with Notepad on my system. So for MS files, you can select
the "Edit in" option which will launch Word (or whatever) and when you
save it saves it directly back to the doclib. Again this isn't always
the case. I have Office 2003 installed so maybe SPS+Office is doing
something extra.

For your laptop users I would see it as a 3 part process:

1. click  on the menu and select Check Out
2. Right click on the name of the document  and select "Save Target As"
(browser menu)
3. edit  the document locally
4. Return to portal and select Check In
5. Upload the document from your laptop

If you don't have the check in/out menu options this is going to be
impossible so that needs to get working first.

PS the check in menu is where you can undo a check out. Took me awhile
to find this option.

This is standard behaviour for extranet scenario. This is because
Sharepoint cannot pass credentials to Office application and therefore
requires a new authentication. The only workaround is once authenticated
to leave the target Office app opened.