I had an interesting problem earlier this week. I had a MOSS VM that seemed to work okay, except whenever I tried to create a document using the template on a Document Library. Then I would get the error:

Word could not create work file. Check the temp environment variable.

Okay. So I did – and the temp variable was just fine. Odd, I thought. Eventually, after digging through news groups and so on, I found a suggestion to check parts of the registry. Well, actually, one of my colleagues found it. The value in the key

HKEY_CURRENT_USERSoftwareMicrosoftWindowsCurrentVersionExplorerUser Shell Folderscache

was wrong – it pointed to an invalid directory. Not sure why, but I’d been monkeying around with some stuff which could’ve mucked it up. Anyway, fixed up the filepath in that key, and it was fine – I could create documents from Document Library templates.