ok, just posting the answer in case anyone else has the problem - seems like
it was the automatic upgrade to Explorer 7!!
here's the fix:
After upgrading to Internet Explorer 7, FrontPage is asking for a
username and password when trying to publish back to my computer.
Follow this sequence to stop FrontPage from asking for a username and
password when publishing back to your "localhost" folder.
In this order, navigate through the menus:
Tools
Internet Options
Security
Local Intranet
Sites
Advanced
Add and add
http://localhost to your zone
Uncheck "require server authentication"
After adding localhost, it will appear in your websites list
*******
Pam