I found the darn issue...
both ie7 and firefox.
I played with the cookie settings and thought that may be part of it, but it still worked when i turned the cookies back to the default settings, so nobody has to mess with them.
MODULES, LOGIN. This is the pesky buggar. I used a template install, so not sure if yours has to, my guess is yes.
Locate the REMEMBER ME checkbox setting and make sure that it is set. I just set mine and hid it, so it must be a bug any other way.
Hope that helps! I have been looking for 4 days and finally found the problem...PRAISE GOD! (I'm serious...I just now asked Him for the first time and poof. Thank you, Lord.)