I find the Word (Office 4 Mac 2011) seriously flawed in creating labels in WORD from Excel database; any comments?

I have used the "mailmerge" functions in Snow Leopard with Office 2004 on many previous situations.

With Mountain Lion and Office 2011, I am not finding success in using "mailmerge" to create labels using WORD and an Excel database.

All is well until Mail Merge Manager asks:

get Recit List

Convert file from .......

"choose Excel Wowrkbook" (I have chosen each of the listed choices with same result)

ALERT reads Excel Workbook text converter check OK if from trusted source

ALERT reads There was an error opening the file.

I have checked with the Microsoft online instructions and followed them to the "letter"; with the same disappointing results.