I am using the Word-Add-In as well and its working fine. A colleague of mine wanted to start the Add-In yesterday (both PCs Windows 7, Word 2010). It failed with the error described above. We decided to have a look at what is going on and found an issue in the code base that resolves the execution path. I will put the needed stuff here and then inform the team. Hope this works as I am not familiar with the process on this site.
So, if you remove the template from the folder %appdata%\Microsoft\Word\STARTUP and copy it to somewhere you can open the template and are able to use the developer tools to look into the VBA code. In Module PlantUML go to function getExePath (used by getJarPath and by getDotPath). If you have a new document there the mainPath variable starts with an empty string. Afterwards the search starts and if you accidentically have the plantuml.jar in your current directory, the file is found and the resulting mainPath which is then returned is the empty string. The calling method getJarPath interprets this as not finding the file and you end up with a message box stating the error "Error : Cannot find plantuml.jar in : ...".
So, the general solution could be to remove the plantuml.jar from your default current directory. But in my opinion this should be stable working hence, we made an own version (I must look to reference it here somewhere and will do so, but put down changes here). For this we took the function getExePath and added the following lines of code between the lines 111 and 113 of the method:
' In case mainPath is the empty string as the active document is the empty string,
' and in case the plantuml.jar can be found in the current directory, the below
' code results in mainPath being the empty string which would work properly if
' the calling method would not check for an empty string as execution path
' and state this is wrong and has to fail. Therefore, change main path in case
' it is an empty string at this point with an explicit, not empty string stating to
' use the current folder as relative path.
If mainPath = "" Then
mainPath = ".\"
The comment is lengthy but I put it down to prepare giving the code back to the people here.
This fixed our issues. Hope it helps.