Periodically I receive a worksheet from a colleague in which he uses
VLOOKUP functions that reference files in his department's restricted
server storage area. (Each department has a secured sharename on a
server, accessible only to registered users.) I import this tab in its
entirety to a workbook I use.

A sample VLOOKUP formula is
=VLOOKUP(D16,'\\server name\share name\Directory\sub directory\sub
directory\[filename.xls]Sheet1'!$A$4:$E$359,2,FALSE)

When I open the file I am prompted to update external references. If I
click "update" I get an error, "Workbook contains links that cannot be
updated". If I click "continue" I can work on the file; if I click
"Edit links" I see the files that are referenced with a notation
"Error: source not found". I can see the shared name on My Computer
but cannot access it; I can see it from a command prompt but I get
"access denied" responses when I try to list files on that share name.

The weird part is: if I give one of these VLOOKUPs a new lookup_value,
I get an answer, rather than a prompt for a password or "access
restricted" message. The substantially weird part is: I can close the
file and close Excel, unplug my network connection, reload the file,
use a new lookup_value and STILL get an answer.

Is Excel somehow referencing files somewhere on my hard drive? This
appears to be a security lapse on the network, but getting an answer
when I'm physically disconnected from the network suggests otherwise.
Any ideas?

Thanks