Com Exception was unhandled error using VS2005

Am a complete newcomer to VS2005. I have a reasonable knowledge of Access Visual Basic.
Am trying to develop a very simple Windows application for use on local machines (not on the server).
I have a simple form with the following coding:

Imports System.IO
Imports Microsoft.Office.Interop.Word
Public Class Form1

    Private Sub Form1_Load(ByVal sender As System.Object, ByVal e As System.EventArgs) Handles MyBase.Load
        Label1.Text = "Printing Letters to Schools"
    End Sub

    Private Sub Button1_Click(ByVal sender As System.Object, ByVal e As System.EventArgs) Handles Button1.Click

        'Create new document based on template
        Dim strTemplateFile As System.String = "C:\Web Design\LIFEnet\LifeMergeTemplate.dot"
        Dim WordtemplateFile As New _
           System.IO.FileInfo(strTemplateFile)

        ' See if the file specified exists
        If (WordtemplateFile.Exists) Then
            Dim wordApplication As New Microsoft.Office.Interop.Word.Application

            ' For improved performance and to prevent screen flashing set visibility to false
            wordApplication.Visible = False

            ' Add the template to the new word application
            Dim wordTemplate As Microsoft.Office.Interop.Word.Document = wordApplication.Documents.Add( _
             CType(strTemplateFile, Object), , , False)

            wordApplication.Visible = True

            ' Activate the new wordTemplate document
            wordTemplate.Activate()
        End If


    End Sub
End Class

The problem is when I run the application with Debug.Start Debugging and click on the button I get a "Com Exception was unhandled" error (80040154) on the line:

Dim wordApplication As New Microsoft.Office.Interop.Word.Application

Have added a  reference to the Microsoft Word 11.0 Object Library and there is one to Microsoft Office 11.0 Object Library.

Can anyone tell me what is wrong? There are no errors shown on the Error List.