I came across this issue today where a client's Outlook 2010 client would connect to Exchange (2010), download all the email and then prompt for a smart card. It wasn't the usual prompt for a password/user name OR a smart card, it simply said insert a smart card. The client next to her had the same prompty (oddly sized) except it just said "connecting to...." Apparently this was caused by a recent update from Microsoft for Outlook 2010 - kb2553248. There is currently no workaround except to uninstall the update. That resolves the prompts and you can go about your business. Credit answers.microsoft.com.