This could be due to a corrupt Office 2007 installation on the client machine. Repair or reinstall Office 2007 on the client machine.
Or it could be due to ActiveX Security settings in the browser. Check the security settings for the applicable Zone. I.E. Check that ActiveX is allowed.
Or check in Central Admin/Application Management/Authentication Providers, select the correct Web Application and click on default. Ensure that "Enable Client integration" is set to "yes".
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