Outlook 2010 - Error creating/opening PST folder

I can't get outlook 2010 to allow me to add in a personal folder. There are three ways I know of doing this:

1. From Account Settings

Start Outlook | File
Account Settings button | Account Settings item
Data Files tab | Add

This results in error message "An unknown error occurred, error code:0x80070002." At this point you can only click OK and it will keep doing this.

2. Creating New Item in Outlook

Home tab | New Items | More Items
New Outlook Data File at the bottom

Here I get another error "Cannot find this file. Verify the path and file name are correct." Again this error will repeat itself.

3. Using Control Panel Mail item

Control Panel | Mail | Data Files
Add

Here the error from the first method is displayed again.

Tried multiple repairs of Office, recreating profiles, deleting registry keys related to profiles. Issue isolated to single workstation in the network, tried logging on with different users with same result.

Any help is appreciated.
Thanks in advance.
HuonITAsked:
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HuonITAuthor Commented:
SP2 update fixed.
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nobusbiljart fanCommented:
did you try a repair of outlook yet, or run a scan on the pst ?
http://support.microsoft.com/kb/287497
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HuonITAuthor Commented:
Fixed it.
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