Error double-clicking on Excel icons

[Ascot]

This is WEIRD.

If I double-click on an Excel document Icon (and the document has a multi-word name e.g. my doc.xls), I get error saying that the document cannot be found.

I click on OK and THEN I get an error message saying that my.xls cannot be found

I click on OK and THEN I get an error message saying that doc.xls cannot be found.

I click on OK and a new instance of Excel opens with a blank document.

If I un-tick the "Ignore other applications" option in the General Tab in Options, the same happens EXCEPT:
(a) I don't get the FIRST error message (the one with the full filename)
(b) after I've OK'd all the other error messages the document does open (in a new instance of Excel)

I've done the following:
(a) re-installed Excel
(b) checked the File Type settings with another user in the same office (actually copied & pasted his via VNC)
(c) tried re-associating .xls files with Excel by right-clicking and using "Open with" and checking the "always use the selected program ....."

At least (c) opens the document with no errors, but my job means constantly trying to open documents of many kinds from lists generated by other applications and Excel is the only one which doesn't let me double-click.

Any ideas out there?

Cheers