So we can hunt this bug down, i've been testing the launch methods on my vista64 machine.
With the "use document launch helper utility" on,
- method one launches everything with no problems.
- method two can't launch .doc files decently, word opens but doesn't have any file open. Notepad files are opened correctly, and so are .lnk and executable files.
With the option off,
- method one launches everything correctly.
- method two has the same effect as above.
So, one could say that in my system, the option has no effect, and the method one is preferrable.