Is there another way I can use, so the log on details are looked up by the database from an area on the shared drive. This will enable me to place the mdw file in one area and it will be used by everyone accessing it on the LAN.
Actually, you don't have a choice. You MUST place the .mdw file in the same directory as the .mdb to which it applies unless you have a shortcut that explicity names a different path for the .mdw file with the appropriate switch-type option. But it MUST be on the shared drive to be shared. The problem doesn't go away, though, 'cause the users have to join the workgroup for the shortcut to work, and you cannot prevent them from bypassing the shortcut.
The problem is though that I cannot go around every computer changing the mdw file in each individual computer's system 32 folder as this is inpractical.
You don't have to change their .mdw file - in fact, you should not. You want to share the .mdw and get everyone to join it. The only effective way to secure your DB requires you to gut the Admin account and Users group so that neither has any rights to anything. I posted a long discussion about this but don't recall at the moment to whom. Don't try this ("don't try this at home, kids...") without finding the writeup first. If you do things in the wrong order, your DB is hosed forever.
Search for posts with my name from the last couple of weeks. One of them describes in detail how to disable the Admin account so that your users will be FORCED to join the workgroup if they need to see anything. This is what you want. Make THEM come to YOU.
Practical or impractical, there IS NO OTHER WAY to share a DB safely than that ALL USERS MUST JOIN THE WORKGROUP. This is the whole point of security. If you have someone who doesn't want to pay the price of admission, they cannot be allowed to see the show. Pay to play or go away. No middle ground, no exceptions, no foolin'!
Having said that, ...
Welcome to the world of user administration, where you quickly discover that USER is, indeed, a four-letter word, to be spoken in the same way as any other four-letter word used vehemently.