Can't open other's password protected documents

I'm not sure if this is some mutant windows thing, or what...
If someone in my workgroup (i.e. sitting five feet from me) saves a document in Adobe Acrobat 7.0 with a password, I cannot supply the password and edit it in  Illustrator cs4 or Adobe Acrobat 7.0.
I have the correct password, and this is an ongoing problem with many different documents.
Usually an .ai file is saved as a .pdf, then combined with a cover sheet and password in Adobe Acrobat 7.0.
I cannot un-password other's password protected .pdf files.
Windows xp
Illustrator cs4  (14.0.0)
Acrobat 7.0.0 Standard

>Acrobat 7.0.0 Standard
I'm pretty sure there are updates for that version
Apply all updates IN NUMBER ORDER
Acrobat Update http://www.adobe.com/support/downloads/product.jsp?product=1&platform=Windows

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