I exchange docs with others a lot. But I do not have your exact setup HOWEVER this was found to happen when a corrupted usb stick was at the office. Same messages and same advice. As a test we emailed a doc over and that worked so we knew to look at other than Windows 7 issues.
I have been googling this problem for two days, and haven't come close to seeing this problem. The systems my company have been using are XP Pro with Office 2007. I recently got a new VAIO VGN-NW350F with win 7, and installed Office 2007 Pro. Now, whenever I open a file saved on one of the XP machines, I get an error message that says in Excel that the format of the file is different than the extension. Do I want to open it. If I click yes, The file is gibberish. In Word, I get an error that says it can't read the encoding, and none of the encoding options work. All of the wonky files are saved as 97-2003 format. I opened the files on an XP machine, and saved as in 2007 format, and they work fine.Please help. My boss is convinced the only fix is to downgrade to XP.