We have a SharePoint 2007 site that is configured with Forms Based
Authentication. Office Integration works fine when user works with the
current version of any Office file. However, when user views version history
and clicks on an older version of an Office file, a strange thing happens.
The Office application (e.g.: Word) opens up, and the Windows Security login
prompt is displayed. It seems totally wrong that the user is being prompted
for his/her Windows User ID and password when the site is configured to use
Forms Based Authentication. Users can simply click the "Cancel" button in the
login dialog and then the document opens normally.

This may seem like a mere annoyance (because clicking the Cancel button is a
relatively simple work-around), but this is a customer facing site so it
looks bad.

It occurs consistently on all clients we test with and in several servers
that we have set up in different locations.

Is this a bug in SharePoint Office Integration, or do we have something
configured incorrectly?