New install of Office 2K7 Home/Student won't run except as administrator -- why?? How to fix?

My daughter has a brand new Dell laptop and am older tower PC. She
got Office2K7 H&S with the laptop and it's installed on there and
running fine.

Her desktop PC has a recent fresh install of XP Pro along with a few
shareware or open source progs, including OpenOffice.org.

She decided she'd put the MS Office on the desktop rather than use
OO.o (the EULA allows this). We installed it, then rebooted. Then we
went to MS Office UPdate site and did the SP1, then rebooted again.
Double clicking on the executable or clicking on the start menu entry
results in a few seconds of an hourglass then nothing. It won't
launch.

Log out and log in as administrator and it works fine and we were able
to activate it, so it seems like a rights issue of some sort.

Her user account shows she is an administrator user.

How do I fix this for her?