We’ve had reports from a few users who are unable to open PDF files from within their accounts through the Web Folders interface. After some research we’ve found that this is a known problem with Web Folders for XP users who are also running Office 2007. (Note- some users have reported that the problem effects Office 2003 as well and that this fix solves the problem.)
Microsoft has released hot fix KB943337 that should resolves the problem for most users with webfolders (also known as webdav) and PDFs. You must request this hot fix as it is not part of their automatic update process.