Oh ..I forgot to blog about this!
If you are using browser object to open Excel files or opening Office files in browser,the file type browser flags needs to be set to “Browse in the same window.” If not, the file opens in the Office application outside the browser object. This worked well in XP and/or Windows 2003 Server.
But if you are using Vista/Office combination and you are getting an unusual behavior, there may be two reasons.
1) In Office 2003 the default behavior was to open in the same window, and in Office 2007 the default behavior is to Open in a new window, if you relied on the default behavior, that's the issue.
2) If you did not, but you are not able to find "Browse in the same window", don' try ..that check box is not there. why ..? I don't know :) but I know a workaround ..
Under the key: HKEY_CLASSES_ROOT\Word.Document.12
Add a DWORD value named "BrowserFlags" and set it to 0.
almost the same thing can be used in Excel[I hope you'll judge which key you'll need to modify]. In fact recently a KB was published for the same issue. http://support.microsoft.com/?id=927009
ummmm... I am not sure how to say this ..but when I tried the KB and I tried to do the settings for excel, it didn't work quite well, so I tried Excel.Sheet.8 in place of .12 and it worked!! why ..I don't know!