Sorry to dig up an old thread, but I thoguht I'd post my solution for this error.
We'd recently completed a rollout of Office2003 on top of OfficeXP. Turns out it wasn't uninstalled properly on one computer and as a result, this error was popping up because the file type (.doc in our case) wasn't properly registered.
So went through Folder Options --> File Types and changed the association of the file to the new version of Office, and voila! All fixed!
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