Hello HomerGentry,
I hope you have seen the messages that suggest using the DDE connection method as a workaround, which may be a viable solution in some cases.
It's difficult to avoid a "techie" assessment of the situation.
Following your post I have tried several installations of Office 2010, with and without Access, on Windows 7 32-bit and 64-bit. On the 64-bit platform, I've tried both 32-bit and 64-bit versions of Office.
Unfortunately from the point of view of trying to identify the problem,
a. I have been unable to replicate the problem so far - i.e., I create a simple test .xlsx, select it as the data source for a merge, and everything works fine.
b. my version is the Pro version which includes Access, so even when I have unchecked Access during the installation, it may not have the same overall effect as installing the Standard version.
c. Although I am fairly sure I could simulate the problem by removing some of the relevant Windows registry entries, I don't think such a simulation would actually get anywhere.
d. It is possible that this situation only arises if your win7/Office2010 system has been created from an upgrade (e.g. Win XP or Vista->Win7 and/or Office 2003/2007->2010). If I had the time and energy to try even one version of those upgrade paths,
I suppose I might find a combination that causes the problem. But I don't. And it is only my subjective judgment, but I can't actually think of any reason why an upgrade from a /working/ version of Access/Jet/ACE would create a non-working version.
So my only suggestion right now is as follows.
Can you please try creating a new mail merge data source from within Word, i.e. by choosing Select Recipients->Type New List, then creating a new list (it can be short!) and going through a merge based on that list. The resulting list is in fact an old-style
Access .mdb ("Jet") database. If you can use that successfully as a data source for a Word merge,
a. it suggests that the necessary "Jet" components are installed.
b. it is worth trying connecting to your Excel data source again. If that then fails, my best guess is that the Word 2007/2010 "ACE" equivalents of the older "Jet" components are missing.
If you have a copy of Office 2010 that is in warranty, I strongly advise that you contact Microsoft support on this issue as well.