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When I edit an OFT file in Outlook that is located on my computer, the save button does not save my changes. Why?

Unfortunately, this is a bug in Microsoft Outlook 2007 and it is beyond our ability to solve. What in fact happens when you open a saved mail item (or template as in this case) in Outlook is that the program makes a copy of the message and stores it in your Drafts folder. If you subsequently choose the 'Save' option, it will save the copy and not the original.
 
In fact, Outlook is completely unaware of a message's original location after it has been opened. This is one of the reasons why we have provided the ContactsLaw add-in for Microsoft Outlook, which extends Outlook in such a way that it is aware of the original location of version-controlled documents. However, since OFT files on your computer are not subject to version control, the same functionality cannot be offered.
 
Consider, therefore, uploading your OFT files to ContactsLaw using the document template editor and editing them from the document library instead.