I wanted to point people to another post of David's regarding a regression OneNote 2007 SP1 contained where you can no longer create a notebook on some servers that are running WebDAV. You can read about it here: OneNote 2007 SP1 - Can't Create notebooks On Some Servers.
At a high level I will copy and paste the issue:
Issue: can't create notebooks on Windows file share running WebDAV
- If you try to create a new notebook on a Windows file share server that also runs WebDAV then you will fail to create the notebook.
- For example if you try to create a notebook called notebookname at \\fileservername\filesharename you'll get an error message like: "OneNote cannot create a new notebook at: http://fileservername/sharename/notebookname"
If you are facing this problem please read the post to learn the workaround and also please leave a comment on David's blog with your information (again David covers this in the blog post).