Have you set Outlook as your default program for email?
Start Internet Explorer.
Select Tools | Internet Options from the menu.
Go to the Programs tab.
Make sure Microsoft Office Outlook or Microsoft Outlook is selected under E-mail.
I had this problem when using Word 2000 with Outlook 2003. The program versions must match for this function to work properly. If you are using Word 2007, then you must upgrade Outlook to 2007 to get this to work properly. I had this problem until I upgraded my entire Office suite to 2003.
If you have not installed Office 2007 SP1 then intall that. If you have installed it then download the hotfix package released after SP1 located here.