Stephen,
Have you checked permissions on the workstations having difficulty creating and accessing XLS files? When a process is started, the owner of that process might be different form that expected; i.e. the current user or system itself. Task Manager (or, better, Process Explorer, from SysInternals, now owned by Microsoft) could give you insight into that. It might be necessary to start the process as a specific user, or to grant users certain privileges for the XLS directory.
Bart
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