Error Reading File - Photo Editor

I have a new laptop with Windows XP Professional and Office 2007 Professional
and have added Photo Editor from my old Office XP disc. When I try to open
large photo files from my digital camera (7M) I get a message !Error Reading
File. If the camera settings are reduced to 3M I have no problem. If I use
another program to resize the image to a lesser size, I have no problems
opening them. I have no problems opening these larger files with Office
Picture Manager or Photo Studio or Roxio Media Creator or PowerPoint. I
also have no problem opening these same large files on my wife's laptop with
lesser computing power and Office 2003. Both Photo Editor installations were
downloaded from the same old Office XP disc. So, I am guessing that there is
an issue with Office 2007 and Photo Editor that is now setting some sort of
limit on image size. Any ideas on how to solve this?