The form template cannot be opened, because the system administrator has disabled opening form templates that require full trust.

This was being caused by a policy on the user's desktop


"RunFullTrustSolutions" -> DWORD = 0

HKEY_CURRENT_USERS/Software/Policies/Microsoft/Office/12.0/InfoPath/Security".

Source:
http://social.msdn.microsoft.com/Forums/en-US/99280dee-5b26-48a7-b444-9e81f03ae012/the-form-template-cannot-be-opened-because-the-system-administrator-has-disabled-opening-form?forum=sharepointcustomizationlegacy