Here is a great post by Mano Mangaldas
If you get the error "Word experienced an error trying to open the file" or "Word has encountered a problem" while opening or creating a new document based on a template.. in SharePoint 2010
if your document hangs at "Opening in Protected View"
probably you have to disable Protected view in Office 2010..
Below are the steps..
- Run one of the Office 2010 application (e.g. Word 2010).
- Click on File menu, and select Options.
- In the “Options” dialog, select Trust Center in the left pane.
- Click on Trust Center Settings in the right pane.
- Select Protected View in the left pane of “Trust Center” dialog.
- Disable any of all of the protected view options as below by unticking the check boxes:
- Enable Protected View for files that fail validation
- Enable Protected View for files originating from the Internet
- Enable Protected View for files located in potentially unsafe locations
- Enable Protected View for Outlook attachments