Okay, this problem has been plaguing this computer for a while now. We tried googling, and none of the answers found helped to solve the problem. So, I am now posting the answer here for posterity.

Office 2007 Home/Student edition was installed on the computer, running Vista (32-bit). One day, Word just up and stopped working. All the other programs continued to operate as expected. But every time you would click the icon for Word, it would pop up an install dialog, with a message reading "Preparing to install...". After a few minutes of the little progress bar going and going, it errors out, and gives error 1402, something to the effect of unable to access registry key HKEY_Local_Machine\Software\Classes\.wll\....

Searching around, every answer i found had to do with reassigning the permissions on this key, giving full rights to SYSTEM or to Everyone, and propagating the changes down to all sub-keys. When ever this was attempted though, it would tell us that we were unable to access the key due to permissions, even though we had run regedit as Administrator and are logged on with an administrative account.

We also tried uninstalling Office and reinstalling it, as well as doing a repair install. Both these attempts also threw the same 1402 error.

Also of note was that the executable for Word (winword.exe) was MIA and no longer to be found in the Office install directory.