Unable to Edit SharePoint Document Library Template

This week I ran into an issue where a client was unable to edit the document template being used by a SharePoint 2010 document library. In the Advanced Settings of the document library, the user would click Edit Template (see figure below), but the document would open as read only and could not be saved back up to the site.

The user was logged on to SharePoint as a user with administrative privileges for the SharePoint server, but logged on to Windows as a different user account. This was the cause of the problem. When the user opened the document template, Word started and retrieved the template, but Word was using the credentials from Windows which did not have administrative privileges on the SharePoint server.

The fix was to have user log on to Windows using the same account as used for administration on the SharePoint server.