"the handle is invalid" does really look like SEP error.
- is this file embedded to Word or only linked?
- from the screenshot it references the path to ...temporary internet files -> content IE5 and mspaint[1].exe - can you confirm this linkage is really correct? or should it be on the root of teh D: drive?
- if you disabled SEP on that machine can you access this file without issues?
- is this a XP machine? are you able to reproduce the issue on win7?