After editing the Internet Explorer settings via group policy, some users are experiencing errors when trying to launch the Office applications.

 ERROR Examples:

 "Word could not create the work file. Check the temp environment variable."

"Outlook could not create the work file. Check the temp environment variable."

Resolution:

When editing the group policy, ensure that the  Temporary Internet Files setting for "Current Location" is set correctly and/or is not blank.

 

Internet Options > General tab > Browsing History > Settings:

Windows 7 default:  C:\Users\%username%\AppData\Local\Microsoft\Windows\Temporary Internet Files

Windows 8 default:   C:\Users\%username%\AppData\Local\Microsoft\Windows\INetCache

Screenshot of IE Options for Temporary Internet Files

 

Other known causes and resolutions of this error can be found in the Knowledge Base article: 

2285187 "Word could not create the work file" error message when you save a document in Word 2013, Word 2010 or in Office Word 2007
http://support.microsoft.com/kb/2285187/EN-US