Hey Dear,
I was just able to solve this problem in my outlook 2007
Here's the article that explains it all:
Save password setting not retained in Outlook or Outlook Express
I followed the step where we find the .pst file location of problematic email address (which is being prompted the password for), create a new profile (recreate the email account that is giving you the problem) and point the new profile's .pst storage to the old damaged file.
I then deleted the old account. It's now working great! Yoohooooo!
Read it and I am sure you'll get it done asap!
RGDS
Armaan