I ran into this problem and was unable to find a good solution on the web: When you install Office 2003, the .Net debugger just stops working. Its startup time increases to a minute or two, and if you try to attach to a process for debugging you get a message that goes something like 'The debugger is not properly installed. Run setup to install or repair the debugger.'
There's a hint about this at blogs.msdn.com, but it didn't help in my case. If you have Visual Studio installed, running a repair setup will solve the problem without any fuss. (Of course, if you don't count disruption of your development process as fuss... Trust Microsoft to regularly come up with something that will drive your productivity down and make your nerves thinner). IIRC, after Visual Studio repair you also need to repair Office.
So: if you don't have Visual Studio, a reinstallation of .Net SDK and/or framework won't do the trick. What you have to do is delete the offending files an then repeat setup. I simply deleted the whole C:\Program Files\Common Files\Microsoft Shared\VS7Debug folder. Then I did a search on mscordbi.dll in the windows folder which produced two files (sbs_mscordbi.dll and mscordbi.dll) which I promptly deleted. Then I ran .Net SDK and .Net framework setups again, and that cracked it.
Now, you probably could get away with only deleting the VS7Debug folder, because the MDM.EXE file present inside it is clearly different after the repair installation. Before, it's version number was 11.something (yes, it reeks of Office all over), and afterwards it was 7.10, therefore it's the prime suspect. Also, I believe DbgClr.exe is present only in the SDK package and it could be sufficient to reinstall just the SDK. But, since DbgClr now works for me, I'll leave it to someone else to figure out the rest of the story :).