We have replaced the server, in fact simply moved the HDD to another machine which is a P4 and 1GB RAM. Problem persists, in fact it is even affecting Equation Editor in WOrd as well. The only explanation I have been able to get from our supplier is below, does this ring any bells with anyone:
"Yes, the problem is that the domain user which has been added a local administrator rights, however, doesn't have sufficient permission on the local resources. In order to overcome this problem, we could create a local user account and run the application using the local user account.
We need user to log-in as the domain user because the user will then have permission on resources on the network and we could implement group policy to the user. Therefore, the application should not be run with the domain user but local user. To do it, we can just right click the shortcut and instruct the application to run under different credential.
We have to wait for 30 minutes becausethe application will then give up about the system error and run the rest of the code."