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PROBLEM:
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The error message:

Can't create file: FILENAMEYOURTRYINGTOATTACH.EXTENSION Right-click the folder you want to create 
the file in, and then click Properties on the shortcut menu to check your permissions for the folder.

comes up when you try to attach a file to an email.

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CAUSE:
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Outlook only allows you to attach the same file to 99 emails before saying, NO MORE!!!

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SOLUTION:
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"Microsoft Outlook uses a temporary folder to save and open the attachments. 
By default that folder is hidden and the only way to locate it is to look in the Registry: 

1. Open REGEDIT.EXE and go to Edit -> Find... In the Find dialog box type "OutlookSecureTempFolder" 
without the quotes and locate that registry key. 

2. That key will contain the actual folder location, and will look like: 
C:\Documents and Settings\%USER_NAME%\Local Settings\Temporary Internet Files\OLK#\ 
(where # is a random letter or number) 

3. Copy the location of that folder. 

4. Click on Start -> Run... and paste the folder location from step #4 then click OK. 

5. Windows Explorer will open that folder. Please, delete all files present. 

6. Restart Microsoft Outlook and you should be able to open your attachments." 

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SOURCE OF SOLUTION:
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http://www.kbalertz.com/kb_198083.aspx