Shane, thanks for clarifying the row/column thing, that makes more sense.
The options under Data/Edit Links/Startup Prompt are better routes than giving permissions to the folder, though I have figured out the issue.
I use dual monitors to make working on two excel sheets faster, ironically this is the source of my issue.
Having two excel windows open (as opposed to two projects inside one excel window) is the problem. Copying and pasting the link between two windows inserts that "=Excel.Sheet.8" in there and thus prompts the destination file to open the source. Doing the copying and pasting between project files that are in the same excel window works fine and will then update without opening any other files.
To do this excel should show the 'paste special' window that has bubble options to paste all/formulas/values/etc as opposed to the 'paste special' window that makes you choose from a list of pasting formats (picture/bitmap/etc).
Shane thanks for your comments! Hope this helps save someone else a lot of frustration!