Users were having a very strange error where they were being continually prompted for login credentials and even when supplying them they would still not get access and their account would lock.
Interestingly this was not happening on all our SharePoint 2010 sites and only happening to users running windows XP with IE8.
I read many articles on DisableloopBackCheck such as this one from Spencer Harbar which also outlines the dangers, however this was not the issue for me.
Then I came across this blog by Lambert about Prompt authentication dialogue issue using IE8 to access SharePoint sites hosted on Windows Server 2008(R2), not quite the same as my issue but made me check my Kernel Mode Authentication for the site in IIS, mine was disabled as suggested in this blog but I also checked this setting for sites that were not having this issue and I found it to be ticked. I ticked it and the login prompts are gone after initial login.
This tick box is un-ticked by default for SharePoint 2010.
So there you have it, if you are having login pop-ups on xp client machines only then check out the setting below in IIS.