Looking at physical_doc.php and physical_pdf.php, it appears that $CFG->dirroot is applied to the file path, thus causing some real issues for those of use that already have antiword and pdftotext installed. I think that this should be defined in the block config, rather than hardcoded into the file.

See http://moodle.org/mod/forum/discuss.php?d=92977 for details and a patch (with some corrections in the discussion).