I recently faced an issue where the user was attempting to open HTML documents from a document library. He only had an option to download the document. He wanted the ability to open the HTML document directly within the browser.
By default, SharePoint 2010 is blocking the ability to open HTML documents directly from a document library.
However this can be changed by adjusting the browser file handling option. The option is located here:
1. Central Admin\Application Management\Manage Web Applications.
2. Select General Settings for the specified web application
3. For Browser file handling, select permissive. The default is strict.