Could not create the work file. Check the temp environment

Due to a number of reasons the variables under registry key HKEY_CURRENT_USER\Software\Microsoft\Windows\Current Version\Explorer\User Shell Folders\Cache gets changed to incorrect values and you start getting this weird message whenever you use any Microsoft office application.

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

a. Start->Run-> enter "regedit" and hit 'enter' to run the program to edit Registry variables. Go to folder ->

b. Check the variable values- All the variable should have values starting "%USERPROFILE%\". Any variable which is not having this starting point is probably corrupted. In my case, all the corrupted variables had a corresponding "Backup_VariableName". Example: my "cache" variable had a corrupt value while there was a variable called "backup_cache" with correct values

c. Change the value of all the corrupted variables to correct values. Example change value of "cache" variable to "%USERPROFILE%\Local Settings\Temporary Internet Files" and so forth. Close all the Ms Office Programs and re-start. The problem should be fixed now.