Unable to process the request when opening an Excel document in SharePoint 2010

One of our customers recently contacted us with a very annoying issue opening Excel files from SharePoint 2010 document libraries. Upon arriving to review their installation we discovered the following odd behaviors:

Clicking on a document library link to an Excel document resulted in the following error:

Unable to process the request.
Wait a few minutes and try performing this operation again.

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When right clicking and saving the document, SharePoint served up the document as a Xlviewer / HTML document type. Even more helpful… not!

What ever happened to the good old days of the “Open Document” dialog “How would you like to open this document?”

The Solution

EDIT: Updated solution post service pack 1
(What!!!, you don’t have SP1 installed yet?? checkout this link for details)
1.Navigate: Site Actions –> Site Settings
2.Click the Site Collections Features link located under the Site Collection Administration section of the page
3.Locate and active the Open Documents in Client Applications by Default

NOTE: This does not always resolve the issue. We have yet to determine a consistent root cause. If the solution steps above do not resolve the issue, continue on to our original solution below

Original Solution
Perform an IISRESET and you will now be presented with the tried and true standard “Open Document” dialog

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