After editing the Internet Explorer settings via group policy, some users are experiencing errors when trying to launch the Office applications.
"Word could not create the work file. Check the temp environment variable."
"Outlook could not create the work file. Check the temp environment variable."
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
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