Unfortunately
a. it's difficult to tell whether the stream of "security" updates coming
from MS have affected this particular issue. If you don't get updates from
MS (aither automatic or manual) then obviously they haven't)
b. the fact that you can open your Excel file does not necessarily mean
that your Excel file is not corrupt. It may be corrupt enough to cause
problems with DDE.

I would suggest that you try creating a completely new test Excel file and
seeing if you can use it as a mail merge data source using DDE. If you can,
that suggests that your Excel file is corrupt. If so, I suggest you try
exporting the contents to .csv format, importing the .csv file back into
Excel, and saving the file under another name. Then see if you can connect
to that. Obviously, if you have a lot of formulae etc. that will not be
enough to restore your spreadsheet, but it's a start.

Another possibility is that Word, or Word's Normal.dot template, has been
corrupted. You can try following the relevant bits of the following article,
even though it describes solutions to a different problem:

http://word.mvps.org/FAQs/AppErrors/ProbsOpeningWord.htm

Peter Jamieson