I'm having exactly the same problem, but it's not to do with the security
patch mentioned as I haven't loaded it (and won't now!). Waht I've tried is:
Running office repair
Uninstalling and reinstakking office
Removing and replacing the normal.dot

None have worked. I still can't savea single document in Word or Excel. I
tired logging on as a different person and the same thing happens. Also if I
go to the folders where Word documents reside through My Documents and create
a new file it lets me, so its not a security issue. So does anyone have any
further thoughts please before I format the disc and reload windows?

"DAVID I." wrote:

I can't save files to existing folders... can't even do a "save as"... the
EXCEL 2003 Program gets to a "Not Responding" state and I have to crash it.
I was able to save a file to the "My Documents" folder. The same thing
happened to my Word Program. This all happened after I did the latest
security update to the XP program. I "removed" and then reinstalled the
Office 2003 program but the problem still exists.