Hyperlink not working in Outlook 2007

PROBLEM: Links sent within email messages in Outlook 2007 will not open. For me, Internet Explorer launches the link (for us a link to a SharePoint page). However, it times out and crashes the browser. But when you copy and paste the link into the browser, it works fine.

OR sometimes this message is displayed;

ERROR MESSAGE: This operation has been canceled due to restrictions in effect on this computer. Please contact your system administrator.

This occurs because the following registry key is either missing or corrupted:

HKEY_Local_Machine\Software\Classes\htmlfile\shell\open\command

SOLUTION: Restore the Registry key by copying it from another machine.

WALKTHROUGH:

Export the registry key from another computer
1. Click Start, and then click Run.
2. In the Open box, type regedit, and then click OK.
3. Locate the following registry key: HKEY_Local_Machine\Software\Classes\htmlfile\shell\open\command
4. Click the command folder.
5. On the File or Registry menu (depending on your operating system), click Export.
6. Note the location of where the file will be saved. The registry file can be saved directly to the hard drive or floppy disk.
7. Type a unique file name, and then click Save.
8. Quit the Registry Editor.

Next,

Import the registry key
1. Copy the Exported registry key to the desktop on the problem computer.
2. Double-click the .reg file.

You receive the following message:
Are you sure you want to add the information in drive: location file was copied to\file name.reg to the registry?
3. Click Yes, and then click OK.

Issue Resolved.

More information here: http://support.microsoft.com/kb/310049