I had the exact same problem as Extraordinaire, and this worked:

1. Open up Regedit. (Go to Start and type "regedit" in the search field and press enter.)

2. In Regedit navigate to HKEY_CURRENT_USER\Software\Microsoft\Office\12.0\W ord\Data



3. Right mouse click on the "Data" folder and rename it "xData" (you can delete it but this way you can change it back).

4. Open up Word, close it, and voila, problem solved.

I had all the same problems. When I renamed the data file as instructed, Word 2007 functions as normal.