Solution:
Microsoft has introduced a driver with OfficeXP for Alternate
User Input that is used for things like voice recognition that adversely affects
SmartCAM. One of the symptoms is that SmartCAM will hang if you "Keep Defaults".
Microsoft has published a bulletin on their Knowledge Base that can be found here:
For Office 2002:
http://support.microsoft.com/default.aspx?scid=kb;en-us;282599
For Office 2003:
http://support.microsoft.com/default.aspx?scid=kb;en-us;823586
This describes what it is and how to properly disable it.
Sometimes there are things that can be missed, but a good way to check is to press CTRL+ALT+Delete and open the 'Task Manager'. Click the 'Processes' tab. Look for a process called ctfmon.exe. If it is running then the text services of the Alternate User Input has not been properly disabled.
Also check in the Control Panel - 'Regional and Language Options'. Click the 'Languages' tab - then the 'Details' button. Click the 'Advanced' tab on the next form and check to be sure 'System Configuration' - 'Turn off advanced text services' is checked.
Some systems will add this to your Startup menu. If so, remove it.