InfoPath Dev

Another point I wanted to make is that Infopath on this server will not open any forms, even the built in templates. The same error comes up for all of them.

You mean the sample forms that were shipped with InfoPath?

Yes, the sample forms generate the same error.

This is really bizarre. Can you open a form published locally? What version of SharePoint do you have? Can you save the template.xsn file to your desktop and try double clicking on it? What happens? If you get the same error, rename it as a cab and use winzip to extract the files. Open the xsf and make sure it is well-formed XML.