Microsoft just announced the release for Office SP1 will be out on December 11th. One of the slides in the presentation has a workaround for the "Opening an Office document on an internal SharePoint site from Vista client prompts for authentication"-issue.
Configure a fake proxy and configure to bypass for the site Internet Options -> Connections -> LAN Settings ->
- click Proxy Server check box Address: fakeproxy port: 80
- click Bypass proxy server for local addresses
- click Advanced and put a * in the exceptions so client can access external addresses as well
Office Integration Support investigating with Windows