We checked Word and there were NO plug-ins.

Installing Office XP service releases 1 and 2 solved our error. After updating the WinXP/OfficeXP machines with Office XP SP1 and SP2 we were able to successfully run our mailmerge letters without getting error code 0x80010105.

I am thankful this worked as I am always hesitant to add WAITs to our code.
Loraine