SharePoint 2010: Word experienced an error trying to open the file

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
Or
if your document hangs at "Opening in Protected View"

probably you have to disable Protected view in Office 2010..
Below are the steps..

1. Run one of the Office 2010 application (e.g. Word 2010).
2. Click on File menu, and select Options.
3. In the “Options” dialog, select Trust Center in the left pane.
4. Click on Trust Center Settings in the right pane.
5. Select Protected View in the left pane of “Trust Center” dialog.
6. 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