Try launching it in safe mode and see if it works there. If that doesnt work try launching in safe mode with command prompt. Then use command prompt to launch the application i.e. cd c:\program files\microsoft office\office 9\winword.exe ...the path may vary so be sure to note it.
Basically that will launch the application outside of "explorer" so in case it is a conflict with explorer we can figure it out. This would at least give us a starting point.