Could not initialize photoshop, because the file name was not valid

Hello,
my friend (not very good with computers) asked me to fix his Photoshop 8, because "it just stopped working one day". When I try to run it, I see splash screen, initializing photoshop, something about TWAIN, and then:
Could not initialize Photoshop, because the file name was not valid
followed by crashing the Photoshop. I tried reinstalling Photoshop, resetting user preferences, even deleting all user settings from Documents and Settings folder, but nothing - I keep getting this error. I tried plugging in his camera, usb flash disks, because I thought Photoshop may created scratch file or something in there - but it didnt work.
So I decided to install him my copy of Photoshop CS3, just to make sure its some bug in Photoshop 8, but I didnt believe my eyes - after installing, im getting the exact error again.
And now Im completely lost - I was unable to google the error message, looks like Im the first person ever who happened to see it.
His computer is about two years old, 2 GHz cpu, 512 MB RAM, some decent video card, 100 GB space left on disks, operating system is Win XP SP2.
I would really appreciate any help, thank you in advance
Peter

>Yes, many times.
:) never hurts to ask!
also have you tried creating a new user with admin rights to see if it's an id issue? (sorry, there's several similar theads going on and i sometimes forget what i've read where.) there was just a guy yesterday that solved a similar problem by creating a new id. we could never tell what the problem was with the old one...

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