Edit Word 2007 User Template on Network Drive

[eraH]

This is happening on a RDS server (Windows 2008 R2).

Tricky one, and I'm not sure if this is in the correct forum.

If I redirect user templates in Word 2007 to a users home drive on the network then they can't edit the file. They can right click on the file and choose open, but then get an error message

Normal.dotm is locked for editing by 'XXXX'.
Do you want to:
Open a Read Only Copy
Create a local copy and merge the changes later
Receive notification when the original is available

If you open a read-only copy, then a notification is displayed that a newer version of the document is available.

I've checked and the file is definately not being help open by anything (used Process Explorer).

If the location of the users template is not changed, then they can make changes to their normal.dotm.

I've done the usual Google searches but haven't come up with anything.

I've checked security settings and for old temporary file left behind but there is nothing.

Any ideas?