Unable to save files to UNC

NW51SP7
WinXP SP2
Client 32 v4.9

User tries to save a file from within Word and gets an error that he is unable to save. User has sufficient rights to the foler. After some digging, I noticed that Word attempts to save to UNC (\\server\vol1\path) rather than to mapped drive letter. Browsing through Network Places to UNC won’t let user in to further than the \\server. When trying to access \\server\vol1, user gets permissions error. He is OK to browse via mapped drive though.
Two things, I’d guess:
1. Why Word is trying to save to UNC and how to change its mind to save to drive letter
2. Why isn’t user allowed to save/browse to UNC in the first place