I was trying to assist someone with Excel 2007 spreadsheets on their computer
at a different company, but finding the same problem does not occur when I
open them on my computer (also 2007). Here was her problem:

Two workbooks open. Select a cell in the first (source), copy, then Paste
Special, Paste Link into a cell in the other spreadsheet. A dialog box
appears and asks which type of link it should be. At first she selected
Excel object, but then the data appears as an object with sizing handles and
cannot be formatted as data. Later found that she needed to select it as XML
spreadsheet... and that seemed to work better. She also tried to do a simple
link formula by selecting the result cell and choosing =, then selecting the
appropriate source cell in the other workbook. I did not have that problem
at all when she emailed the files to me. My question is...why does she keep
getting this dialog box for Paste Link, and what can we do to stop this? A
simple link should work - simply. Thank you in advance for any suggestions
and wisdom. :)