Hey! I'm back with the same problem.
Today to try and sort it I stripped out Office 2010 and reinstalled 2003. In that I can zip around directories and folders during 'Open' and 'Save As' like no tomorrow. Emboldened by this I stripped out 2003 and put back a full 2010. I now cannot do that. If I select 'Open' it naturally opens in the chosen docs folder. Selecting 'My Computer' from the sidebar produces the M$ torch waving around and 'not responding' in task manager and ultimately it has to 'Force Word/Excel to close' and report to M$ etc etc.
Does anyone know what has changed here between 2003 and 2010 and more importantly how to sort it? I cannot work out the correct term for Google to describe the problem either!