Word 2010 Open/Save Dialog Box Event ID 300

I have a user that has a strange issue with Word 2010 on Windows XP. When the user tries to open or save, the dialog box never appears and an error sound is heard. I checked the event viewer and found the following error every time open or save is clicked.

Event Type:      Information
Event Source:      Microsoft Office 14 Alerts
Event Category:      None
Event ID:      300
Date:            6/6/2012
Time:            1:29:53 PM
User:            N/A
Computer:      --------------
Microsoft Word
Word has insufficient memory. Do you want to save Document1 as Rescued document?
P1: 200094
P2: 14.0.4763.1000
P4: 0x80070002

I've repaired and re-installed Office 2010, started in Safe Mode and disabled all add-ons. I'm fully updated and ran a virus scan and searched Google high and low.

Excel and Outlook work fine.

Any suggestions? Thanks!
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Try these troubleshooting steps from Microsoft:

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