When trying to edit documents in SharePoint from the context menu item “Edit in Microsoft Office Excel”, users received an error message: “‘Edit Document’ Requires a Windows SharePoint Services-compatible application and Microsoft Internet Explorer 6.0 or higher”
1. This functionality works only on the 32-bit version of IE and not with IE 64 bit version. So use IE 32 bit version. You can access it from C:\Program Files (x86)\Internet Explorer\iexplore.exe even though you installed the 64-bit version. More info: http://technet.microsoft.com/en-us/library/cc263526.aspx refer ActiveX controls section
2. Make sure all the SharePoint add-ons are enabled in IE. Refer this screenshot.
Go to Internet explorer >> Tools >> Manage Add-ons to enable the add-ons.
3. This functionality doesn’t work in Firefox (found it works with Google Chrome!)
4. Try adding a SharePoint site to the trusted sites list in IE.
5. Register the Owssupp.dll file as per the KB: http://support.microsoft.com/kb/833714/en-gb
6. Check Web client service is enabled and started.
7. Try Running Microsoft Office Diagnostic: Microsoft Office Tool >> Microsoft Office Diagnostic
8. Repair/Re-install Ms-Office. Make sure, You care Installing “Windows SharePoint Services Support”during Microsoft Office Installation.
9. Don’t forget to check Microsoft Office installed on the client machine! Also check whether the compatible application is installed to open the document (E.g. Client may have Ms-Word 2003, and the document stored may be in Ms-Word 2007 Format.)
10. Last but not least: Make sure that the URL doesn’t exceed 260 characters.