One of the more recent updates to Microsoft Office 2007 caused quite some trouble to some users, specifically when running Outlook (or Word etc.) for the first time as a new user on a given machine.

The problem manifests itself by not allowing the user to perform any operations inside the program, or exit the application. In Outlook, this means you can’t open an email, or pretty much anything else. The program won’t even exit. There’s one hint however – if you try and tun a second copy of the program, you get the error message: “A dialog box is open. Close it and try again.“

As it turns out, this is hafll correct. There is in fact a dialogue box open. But it’s not visible to the user. The dialog box is the setup window that asks the user for their name and initials. Unfortunately as fast as the window appearsm it’s hidden again from the user.

It turns out, the problem is related to KB946983 (Outlook 2007 Update), so removing this patch corrects the functionality… It’s important to note though, that update does correct a security vulnerability in Outlook, and you may wish to re-apply the update after you’ve fixed the problem.

The second option to resolve this issue, is to run one of the other Office 2007 programs (e.g. Word), fill in the dialogue box, save the settings, exit both programs (You’ll probably have to end the “Outlook.exe” taks from the task manager), then re-start it all. This usually works, but some users have claimed this did not help, which may or may not be related to the order in which they do these things.

Hope this helps someone.

Ref: http://office-outlook.com/outlook-forum/index.php/m/282796/