We recently came across a problem on some of our sites where users couldn't open PDFs from websites (embedded or linked).
Also, when users tried to open PDFs on the local network they received the following message:
"Adobe Reader cannot open in Protected Mode due to a problem with your system configuration. Would you like to open Adobe Reader with Protected Mode disabled?"
() Open with Protected Mode Disabled
() Always open with Protected Mode Disabled
() Do not open with Protected Mode Disabled
It turns out the problem in our case was likely caused by a combination of factors but if you're experiencing this I suggest the following:
Check out the Adobe KB Article that deals with Adobe Reader Protected Mode Troubleshooting: http://kb2.adobe.com/cps/860/cpsid_86063.html. Pay specific attention to the "unsupported configurations" section. On a number of our sites we use DFS and McAfee. In this case both of those are listed as possible issues. Although we install Reader locally on each machine, the user's profiles (Desktop & Start Menu), program shortcuts and AppData are all redirected to DFS paths. I'm guessing this was the main problem in this case - although the presence of McAfee meant that there was another potential issue.
Rather than troubleshoot to isolate the cause of the problem we did a test upgrade of a few affected PCs with the updated Adobe Reader 10.1 and voila - problem solved, case closed, yet another happy bunny 
.