An issue has been identified in Office 2010 whereby you will receive an error message whilst creating Mail merges (using templates) in Office 2010.

Microsoft have released a hotfix for Word 2010 which some schools have found to solve this problem. It is at http://support.microsoft.com/kb/2553912. Please try this hotfix in the first instance, but if it does not help you, the workaround below should help.

This can be resolved by adding the templates folder as a trusted location in Word 2010 - this has to be set up on a machine-by-machine, user by user basis (it is possible to set via group policy, see below).

To set this up, you need to open Word and complete the following steps:

1. Click the File Button and then click Word Options.
2. Click Trust Center, click Trust Center Settings, and then click Trusted Locations.
3. Select the Allow trusted locations on my network (not recommended) check box.
4. Click Add new location.
5. In the Path box, type the name of the folder that you want to use as a trusted location (your templates folder), or click Browse to locate the folder. This must be the full UNC path to the file even if local to the machine, so other users can access it properly over the network.
   
6. If you want to include subfolders as trusted locations, select the Subfolders of this location are also trusted check box.
7. In the Description box, type what you want to describe the purpose of the trusted location.
8. Click OK.

With regards to general SchoolBase settings, the path you have set in system variables to your template folder should also be the full UNC path.

To find and set Trusted location settings through group policy:

(This is once the Office 2010 Admin (ADMX) Templates have been installed onto AD.)

 Found under: User Configuration>Administrative Templates Policy Definitions>Microsoft Word 2010>Word Options>Security>Trust Center>Trusted Locations

(Click here or on the image below for a larger version).