I experienced a problem with MS Office on a networked Windows 7 PC.

On a Windows 7 machine working in MS Office 2003 or Office 2010 (I have both installed) I tried to display the Open Dialog box for a specific folder. It took ages (=45 seconds) to populate this folder. A further annoyance was that the was no hour glass or other sign of life during the 45 seconds. The folder is on a network drive.
The problem occurred in both Excel and Word.

Interestingly, the Open Dialog box opened promptly when I tried to do exactly the same thing from a Windows XP machine.

So, I took a copy of the folder (to avoid annoying other network users) and systematically tried to trace down whether it helped to remove any subfolders or files from the problematic folder.

This process lead me to the culprit: A shortcut called 'Desktop', which referred to
"\\SomeOtherUsersPC\c$\Documents and Settings\xxx\Desktop"

This file obviously generates a timeout problem in MS Office under Windows 7, but not in Windows XP. So, somehow Windows 7 is a lot more eager than XP to investigate the contents of files, and causes this timeout problem when a file is unreachable.

Hopefully this information can help others.