While this is an old issue ... in case anyone does get to this post.. hopefully it will help you and you'll be done.
First .. open Acrobat (run as administrator if needed) go to Edit -> Preferences ... left side select Internet ... DISABLE the View In Browser option (remove check)
Open regedit (run as administrator)
starting from the TOP LEFT ... open the HKey_Classes_Root tree .. then CLICK HKey_Classes_Root so it is highlighted .... start typing the letters for acrobat (usually just typing A C R O will get you into the right area)
TWO Keys need to be edited ....
HKCR \ AcroExch.Document and
HKCR \ AcroExch.Document.7
if you don't have .7, you may have .8, .9 or .something.
In the two AcroExch.Document keys you want to change the EditFlags entry.
EditFlags is type Reg_Binary and normally 0010 or 00 00 01 00
you want it to be 0000 or 00 00 00 00
Exit the editor, and you should restart the PC for good measure, but from this point forward, links clicked in a browser (especially IE) should prompt you for Open/Save/Cancel.
You **WILL** have to do this again any time you update / upgrade. You can Export the two keys (right click HKCR\AcroExch.Document -> Export) and then edit the two files into ONE and save the combined key registry file in your Documents folder or the like ... then after updating / upgrading Reader .. double click the registry file and allow it to be merged back to the registry.
ANYONE getting to this post.. PLEASE post a complaint with Adobe for not making these options defaulted at requiring user interaction. It was a mistake when they integrated into the browser, and its even worse that they default a potentially malicious file to auto-download AND auto-open ...
Any Lawyers want to take up a class action against adobe .. just need to find a bunch of people that have been infected through PDF's to go up against goliath.