MS Office 2003 Mail Merge Strangeness

There isn't anywhere obvious to put this, so I'll put it in here and
rely on a kind moderator to move it somewhere more appropriate.

I am having some fun with a mail merge in office 2003.

The situation is this:

Merge source is a text file with ; as a field seperator and # as a
record terminator. It is in the same directory as the .doc that it
is being merged in to.

When the document is opened there is a confirm prompt about
running some SQL. This is expected. Clicking yes here will run
the mail merge.

On my pc, this works as expected.

On the client PC, a file conversion box pops up to select the
encoding that makes the text file readable. This happens
every time, regardless of what is selected and saved.

Both PC's are using exactly the same version of Office, the same
word document and the same text file, so I am thinking it must
be an environmental thing. But I can't find anything and was
hoping that someone here had met this problem and found
the solution or could at least point me in the direction.

I'm really stuck on this one.