Hello,
well, "The URL for this file is too long for the application." - this is causing the problem. There is a limitation in Office / SharePoint that the path to a document can not be longer than X characters (X may depend on the version of Office, but I am not sure about that - 255 is a good bet though). So if the combined path to the document (including the site name and document library name) exceeds that limit, Office can no longer work with the file.
It is best to keep your structure as simple as possible, and use the title / description properties for more descriptive information instead of the name.
Regards
Axel