Providing users the ability to Merge using a DAT file under Windows 7

Question

Hello,
Our organization uses older software that uses Word Templates with Merge Fields, pulling data out of a SQL database.  The software itself is old and out of date, but still works under Windows 7.  The problem I am having is that the software will
place its own macros inside of Normal.dot to properly merge fields using the Word Templates.
Each Merge document accesses the application folder and goes into a sub-folder to access a file called WORDDATA.DAT that is the data source for the merge.  Each workstation has their own WORDDATA.DAT file stored locally in C:\APPLICATION\temp\
In XP (we never used Vista), the proper way to get these merges to work was to do the following:
1. Provide Power Users (see below) with Modify rights to the main APPLICATION folder and propagate those rights down to all files underneath of it (including WORDDATA.DAT).  We also had to remove inheritable permissions from the root drive (C).
2. Add Domain Users to Power Users group (for some reason the merges on XP would not work without this) so that anyone logging onto the machine could merge.
3. These templates required the Low security setting for macros in Word for the merge to work properly.
The problem I am facing now is that I cannot get the merges to work properly under Windows 7 Pro without giving the user Administrator rights on the local machine.  This is obviously not a good idea.  No matter what I try, nothing seems to work. 
I've disabled UAC on these machines.  Given Full Control rights to the application folder and all sub-folders and have even gone so far as to make the user the Owner of the application folder.  But no matter what I do, the merge will not work unless
the user is added to the local Administrators group.  I've also noticed strange behavior with WORDDATA.DAT, where it will not relinquish the Read-Only attribute.  After running 'attrib' and stripping it of Read-Only and System attributes, the file
reverts to showing Read-Only in the properties.  I don't know if this matters or not, but it appears as if Windows will not let anyone modify that file completely.
Does anyone have a suggestion for a workaround?  Keep in mind, 1. Disabled UAC, 2. Running the application under Compatibility Mode for XP.
I realize we are using outdated software and this can cause some issues of course, but the basic principle of merging documents works.  It has nothing to do with the application itself IMO but seems to be more of a security issue.

Answer 1

I guess I'm completely out of luck on this issue huh?  The basics of the problem are simply that unless the user is added to Administrator local group on the Win7 machine, when the merge runs and has to use WORDDATA.DAT, it cannot and the merge fails. 
Add the user as an admin and it works but this leaves our systems vulnerable, particularly with users who are happy to just double-click on any old attachment without checking it first.