So I have run out of ideas on what to try for a problem I am having for a user in my office, and I was hoping a few people here may have seen this. The problem is when she opens a .xls file on a shared directory it always opens in read-only mode, even though it prompts her to choose "Read-Only" or "Edit". It will not allow her to save any changes back to the file.

1)She is using Office 2007, so the files are also opening in compatibility mode as well as Read-Only.
2).xlsx files as well as .doc and .docm open just fine.
3)She can go to any other PC and it works just fine so it's not her permission to the folder
4)In Control Panel-->Folder Options "Open" is the default action for .xls, and Microsoft Excel is the default program.
5)We use a sharepoint page to manage the files, she is clicking a link there to open the document.
6)None of the files are flagged as read-only, and it is all the .xls files in there.
7)Opening a .xls file locally on her PC works fine.
8)Not just her windows profile, because I have the same problem on that PC. Works just fine on other PCs.
9)Tried both repair/reinstall of office, even tried going back to 2003.
10)Read-Only recommended is not checked in general options.

Anybody have any experience with an issue like this or any other ideas I could try?
**Update** Also she is on .net 4 if that helps

Office 2010 has introduced two new, linked concepts, Protected View and File Block, to "protect" you from earlier versions of Excel (and Word, etc) files. Here are the definitions from MS Excel Help (sans screenshots):

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What is Protected View?
Files from the Internet and from other potentially unsafe locations can contain viruses, worms, or other kinds of malware that can harm your computer. To help protect your computer, files from these potentially unsafe locations are opened in Protected View. By using Protected View, you can read a file and see its contents while reducing the risks.
Why is my file opening in Protected View?

Protected View is a read-only mode where most editing functions are disabled. There are several reasons why a file opens in Protected View:
.The file was opened from an Internet location When you see the message in Protected View that says This file originated from an Internet location and might be unsafe. Click for more details., the file is being opened from the Internet. Files from the Internet can have viruses and other harmful content embedded in them. We recommend you edit only the document, if you trust its contents.
.The file was received as an Outlook attachment and your computer policy has defined the sender as unsafe When you see the message in Protected View that says This file originated as an e-mail attachment and might be unsafe. Click for more details., the file was received from a potentially unsafe sender.
.The file was opened from an unsafe location When you see the message in Protected View that says This file was opened from a potentially unsafe location. Click for more details., the file was opened from a folder that is unsafe. An example of an unsafe location is your Temporary Internet Files folder.
.The file is blocked by File Block The following images are examples. Learn more about File Block
...Editing isn’t allowed.
...Editing is allowed.
.File validation failure When you see a message in Protected View that says Office has detected a problem with this file. Editing it may harm your computer. Click for more details., the file didn’t pass file validation.
.The file was opened in Protected View by using the Open in Protected View option When you see the message in Protected View that says This file was opened in Protected View. Click for more details., you chose to open the file in Protected View. This can be done by using the Open in Protected View option:
1.Click File > Open.
2.On the Open dialog box, click the arrow next to the Open button.
3.From the list, click Open in Protected View.
Important Administrators can extend the list of potentially unsafe locations to include additional folders also considered unsafe.

How do I exit Protected View?
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If you must read the file, and don't have to edit it, you can remain in Protected View. If you know the file is from a trustworthy source, and you want to edit, save, or print the file, you can exit Protected View. After you leave Protected View, it becomes a trusted document.

Exit Protected View and edit when the yellow Message Bar appears
On the Message Bar, click Enable Editing.

Exit Protected View and edit when the red Message Bar appears
1.Click File > Edit Anyway.

Important We recommend caution and certainty that the file's source is reliable and known to you.

Why can't I exit Protected View?
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If you can’t exit Protected View, it's possible that the administrator has rules established that prevent leaving Protected View. You can speak to your administrator to determine whether such rules have been made.

Problem detected with a file
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Microsoft Office found a problem with your file and it might be a security risk. Opening the file in Protected View helps protect your computer and we recommend that you edit the file only if you trust the person who sent it to you, and if the file doesn’t look suspicious.

Why do I see this message?
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This message can appear for a malicious file, which was created by a hacker to infect your computer with a virus or steal important information. This message means that editing the file could be dangerous. Sometimes the message appears for files that are damaged, for example:
The disk where the file is stored could be worn out or broken.
The file was created or edited with a program that has a problem.
An unexpected error occurred while copying the file to your computer, which can be caused by a problem with your Internet connection.
There could be a problem with how Office looks for problems in files. We work to make it better, but it’s not perfect.

Can I edit the file?
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If the file is from someone you know and trust, you can choose to edit it. But we recommend that you avoid editing a file that seems suspicious. For example:
The file came from someone you don’t know or trust.
You weren’t expecting to receive the file.
The content of the file seems unusual, for example, it appears to be a bill for something you never bought, or it’s causing your computer to display errors.

If the file seems suspicious, close the file and delete it from your computer. We recommend you don’t edit it. To ease suspicion, you can call the person who sent you the file or email the person.

What Office file types can cause file-validation errors?
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Word 97-2003 files (.doc, .dot)
Excel 97-2003 files (.xls, .xla, .xlt, .xlm, .xlb, .xlt)
PowerPoint 97-2003 files (.ppt, .pot., pps, .ppa)

View or change Protected View settings in the Trust Center
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We advise speaking with your administrator before you make changes to your Protected View settings.
1.Click File > Options.
2.Click Trust Center > Trust Center Settings > Protected View.
3.Make selections that you want.


Protected View settings explained
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Enable Protected View for files that fail validation File validation scans file for security problems that can result from changes in the file structure. Clearing this option doesn’t turn off file validation. Instead, an error message appears for files that fail the validation process.
Enable Protected View for files originating from the Internet The Internet is considered an unsafe location because of its many opportunities for malicious intent.
Enable Protected View for files that are located in potentially unsafe locations This refers to folders on your computer or network that are considered unsafe, such as the Temporary Internet folder or other folders assigned by your administrator.
Enable Protected View for Outlook attachments Attachments in emails can come from unreliable or unknown sources.
Enable Data Execution Prevention (DEP) mode You can learn more in Why is my add-in crashing?.

What happens to add-ins in Protected View?
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Add-ins may run when a file opens in Protected View, but may not function as expected. If your add-ins aren’t running correctly, contact the add-in's author. An updated version, which is compatible with Protected View, may be needed. For more information on add-ins, see Why is my add-in crashing?
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What is File Block?
When you try to open file types created in previous versions of Office (like a Word 95 document), the file will open in Protected View by default and the editing functions will be disabled.

File Block prevents outdated file types from opening and causes your file to open in Protected View and disables the Save and Open features. The code used to open and save the older formats have vulnerabilities that hackers can exploit. So they are security risks that should be avoided, if possible.

If the File Block settings configured by you or your administrator are set to Do not open selected file types, the file won’t open in Protected View and an error message appears. See the File Block settings explained section for more information.
Edit a blocked file
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You can make changes in the File Block area of the Trust Center that will let you open, edit, and save your blocked file.
1.Click File > Options.
2.Click Trust Center > Trust Center Settings > File Block Settings.
3.Check the Open selected file types in Protected View and allow editing box.
View or modify File Block settings in the Trust Center
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1.Open an Office program.
2.Click File > Options.
3.Click Trust Center > Trust Center Settings > File Block Settings.
4.In the File Type list, check or uncheck Open or Save for the file types you want to block or enable.

Note You can’t check Open without checking Save.

File Block settings explained
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Do not open selected file types: The file types selected with check marks are blocked from opening, or opening and saving. You will see an error message when this is set.
Open selected file types in Protected View: Selected file types open in Protected View. The Enable Editing button is disabled on the Message Bar and in the Backstage view.
Open selected file types in Protected View and allow editing: Selected file types open in Protected View. The Enable Editing button is enabled on the Message Bar and in the Backstage view.

Note If you work in an organization, your administrator might have set policy that doesn’t allow you to edit files that are blocked.
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See if this helps.