Export Pops Login Screen

Just reporting a quirky thing here... not sure if it is a config issue for our site, or a bug or what. Just want to put it on the radar screen.

We're running AD here. Have Report Services up and have been running about 6 months now.

People on the domain log into the report site just fine.

Recently I rec'd what I thought would be a security problem, but now I'm not so sure. Our COO tried to export an inventory turns report to excel. About half way through the process after he selects 'Open' a login pops.

The problem is that even if the user puts in valid login credentials, the login just pops again, as if there is something incorrect in the values being typed in.

I was able to replicate this on my machine, even logging in as Administrator.

But, I was also, as a regular user on the domain, able to export several other reports. Only the Inventory turns report pops the login on export.

Then it dawned on me, the inventory report uses a group by table that is expandable by product line.
The reality that is shielded from us when all the groups are collapsed is that as of this morning, the total rows in the table exceed 183,000 lines, way more than what one worksheet can hold.

I'm assuming this has something to do with it, but why I wouldn't just see the standard excel error about this and get a login pop instead perplexes me.

Can anyone confirm that this is indeed what happens if you try to export to excel more rows than a worksheet can hold?

I'm trying to figure out if we have a problem or if it is a 'bug' type of thing.