When opening Office documents in a Microsoft SharePoint document library that requires Check Out, users generally receive a pop-up window to confirm that they want to open and check out the document, such as the one below:
The pop-up window has the option to “Use my local drafts folder.” For many users, using this option can cause issues with the check-in and check-out process. Changing the default on this pop-up is NOT done on the server side. It is a behavior specified by the local Office client.
To change the drafts folder default options, open Microsoft Word 2007 or 2010 and go to the Word Options (Office Button > Word Options). Under the “Save” section, change the “Save checked-out files to” option to “The web server” (2007) or “The Office Document Cache” (2010). This will change the default of the “Use my local drafts folder” to not checked.