I've seen this same problem frequently on other message boards and there has never been a solution, so I'm hoping that Microsoft is aware of it (they should be) and can address it definitively.
I have a Word 2007 document with an embedded Excel 2007 spreadsheet. When I attempt to open the spreadsheet I get the message: "The program used to create this object is Excel. That program is not installed on your computer. To edit this object, you must
install a program that can open the object.". Excel is in fact installed. If I have Excel closed when I attempt to open the embedded spreadsheet then Excel actually opens, but then it does not open the embedded workbook and Word immediately gives the above
message after Excel opens.
This is the same problem as is addressed in KB article 960806, except that I do not have "SQL Server 2008 Data Mining Add-ins for Office 2007" installed
I have run MS Office Diagnostics and no errors were reported.
I have "Repaired" the installation from add/remove programs. After I did this the embedded workbook appeared as a
picture in the document and I couldn't even attempt to open it.
I have tried deselecting "ignore DDE" in Excel Options > Advanced > General
I have tried converting the embedding object to a binary object and back again.
The embedded workbook is a macro-enabled workbook, I don't know if it also happens for non-macro-enabled workbooks.