To reduce the chances that you will be prompted for your user credentials, select NTLM Authentication for the RPC/HTTP proxy authentication settings.
To prevent Outlook 2003 from switching to offline mode, type the user name and the password in the Enter password dialog box. If RPC/HTTP is configured to use basic authentication, you are prompted for your user credentials. When the first attempt fails, Outlook 2003 tries to establish an RPC/HTTP connection.
If the network adaptor is not ready, the attempt by Outlook 2003 fails. When this behavior occurs, Outlook 2003 tries to establish a TCP/IP connection to the server that is running Microsoft Exchange Server as soon as the network is available again. This behavior occurs if the computer loses network connectivity for some time and then reestablishes network connectivity. Additionally, if you click Cancel in the Enter password dialog box, Outlook 2003 switches to offline mode. You are unexpectedly prompted for your user credentials in Microsoft Office Outlook 2003. Searching for Outlook 2003 'prompt for password' gives quite a few hits.