My first post so apologies in case of wrong submission.
I had the same problem opening docs in Word '07 using Windows 7 Home Premium. Thanks to this page, I solved it by going to the Office Button in Word, clicking on Word Options, clicking on the Save tab and changing the default file location from C:\Users\my user name\Documents to D:\ which is where all my documents are kept. After that everything was fine. I did the same with Excel.