If you are trying to read a protected mail using Outlook and are getting prompted to enter a Windows Live Id instead of your network credentials it is because there is a conflict between Outlook IRM and the Windows Live Sign-In assistant. I don’t know why this is the case, but will try to find out.
So for now if you are getting prompted for a Windows Live Id when you open a protected mail, just uninstall Windows Live Sign-in assistant and close/reopen Outlook.
I’m using Outlook 2007 SP1 on Windows 7.
Jon