Cannot open excel or word documents

The file you are trying to open is in a different format than specified by the file extention. verify that the file is not corrupt and from a trusted source.
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If you trust the source of the file, click Yes to the warning message.

If you have to control the user-notification function, use one of the following methods.

Important These steps may increase your security risk. These steps may also make the computer or the network more vulnerable to attack by malicious users or by malicious software such as viruses. We recommend the process that this article describes to enable programs to operate as they are designed to or to implement specific program capabilities. Before you make these changes, we recommend that you evaluate the risks that are associated with implementing this process in your particular environment. If you decide to implement this process, take any appropriate additional steps to help protect the system. We recommend that you use this process only if you really require this process.

By default, a user can decide whether to open the file when the warning message is displayed. However, the user-notification function can be set to any of the following levels by using a Group Policy setting or by using Registry Editor:

    Display the warning message, and do not open the file.
    Display the warning message, and let the user decide whether to open the file (This is the default setting).
    Open the file, and do not display the warning message.

Use a Group Policy setting

    Download the 2007 Office system Administrative Template files (ADM, ADMX, ADML) and Office Customization Tool from the following Microsoft Download Center Web site:
    Extract the administrative template files to a folder. To do this, follow these steps:
        Double-click the AdminTemplates.exe file.
        Accept the Microsoft Software License Terms, and then click Continue.
        Select a folder in which to save the extracted files, and then click OK.
        Click OK after the files have been extracted successfully.
    Open the Group Policy Object Editor.

    For more information about how to open the Group Policy Object Editor, visit the following Microsoft TechNet Web site:
    Expand User Configuration.
    Right-click Administrative Templates, and then click Add/Remove Templates.
    In the Add/Remove Templates dialog box, click Add.
    Browse to the folder that contains the Administrative Templates that you extracted in step 2c.
    Click the appropriate Excel .adm file, and then click Open. The .adm file is located in the following folder to which you extracted the Administrative Templates in step 2c:
    Note The English language administrative template files are located in the EN-US languageID folder.
    Click Close to close the Add/Remove Templates dialog box.
    Expand Administrative Templates, expand Microsoft Office Excel <version number>, expand Excel Options, and then click Security.
    On the Extended tab, double-click Force file extension to match file type under Setting.
    On the Setting tab, click Enabled, click one of the following in the Force file extension to match file type drop-down list, and then click OK:
        Allow different
        Allow different, but warn
        Always match file type
    Close the Group Policy Object Editor.

Use Registry Editor

Warning Serious problems might occur if you modify the registry incorrectly by using Registry Editor or by using another method. These problems might require that you reinstall the operating system. Microsoft cannot guarantee that these problems can be solved. Modify the registry at your own risk.

    Exit Excel 2007.
    Start Registry Editor.
        In Windows Vista, click Start
        the Start button
        , type regedit in the Start Search box, and then press ENTER.

        User Account Control permission
        If you are prompted for an administrator password or for a confirmation, type the password, or click Continue.
        In Windows XP, click Start, click Run, type regedit, and then click OK.
    Locate and then click the following registry subkey:
    HKEY_CURRENT_USER\Software\Microsoft\Office\<version number>\Excel\Security
    On the Edit menu, point to New, and then click DWORD Value.
    Type ExtensionHardening, and then press ENTER.
    Right-click ExtensionHardening, and then click Modify.
    In the Value data box, type the value data, and then click OK.

    The following list contains the value data settings that are appropriate for the ExtensionHardening setting:
        0: Do not check the file name extension and the file type, and bypass the function of the warning message.
        1: Check the file name extension and the file type. If they do not match, display the warning message.
        2: Check the file name extension and the file type. If they do not match, do not open the file.
    Note The default value data is 1. When the value data is set to 1, the behavior becomes the same as when no registry value is set. When the value data is set to 0, the file name extension and the file content are not checked in all situations. We do not recommend bypassing this function.
    On the File menu, click Exit to exit Registry Editor.

Here's  a link to the support article
Paul MacDonaldDirector, Information SystemsCommented:
Okay, aside from the copy-and-paste reply, what's going on is that the file isn't what it purports to be.  You've downloaded a file with a .DOC extension on it, but Word has looked at the guts of the file and knows it's not a Word document.  Word is warning you that if you open the file, there may be malicious code inside, and that you should only proceed if you're POSITIVE the file is trustworthy.  

Ditto the Excel file - it's not what it appears to be.  Continue at your own risk.

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