MS OFFICE 2007 (Word,Excel,PowerPoint) - crash/close/bug/problem - when DIALOG BOX launched...while opening files, inserting images, saving files,...
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SOLUTION: adjust the folder settings, probably depending on what your personal changes on that point are...

1) set the icon size:
CONTROL PANEL - Display - View Tab - Advanced - in the left drop down menu set ICON - set size to some fix value (example 36). (This solved the problem for me. Because I changed the size of icons in some directories, and that's when the problems started.)
2) if 1) doesn't work, reset the folder settings:
CONTROL PANEL - Folder Settings - in General Tab - click the only button to reset folder settings
3) if that isn't enough just reset the folder settings and behaviour as at the beginning

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In my case, MS OFFICE worked fine, till I changed the view options and behavior of folders (size of icons in some directories, view icons in some directories ICON/THUMBNAIL/DETAILS/... ..). At first MS WORD would crash each time I wanted to insert an image - at the moment the DIALOG BOX launched for the selection of the image. After changing settings further it started to crash each time I wanted to open a file in MS EXCEL (at the moment the dialog box appeared), and so on....

Probably the problem is that the launched DIALOG BOX belonging to MS OFFICE is confused (in the moment of launching and starting to display) about the folder view settings in WINDOWS XP of the folder that should be displayed in the DIALOG BOX of MS OFFICE. For example, in my case insert image in MS WORD crashed because of the folder settings in WINDOWS XP of exactly the folder that should be displayed in the launched DIALOG BOX (of insert image) in MS WORD.



Didn't try to figure out all the details...
Uninstalling MS OFFICE didn't work!
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=WINDOWS XP==Microsoft Office 2007=
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Having the same problem, and having followed the instructions above (for which many thanks!), Office still got hopelessly stuck each time I tried to open a dialogue box. Now I had my desktop appearance set to "Windows classic" (matter of aesthetic preference). Just as an experiment I reset the appearance to "Windows XP". Lo and behold: this fixed it! The strangest thing, however, is that since then I put all my desktop and folder settings back to what they were at the time the crashes started occurring. And as far as I can tell Office still works properly... Very peculiar indeed.