Unfortunately that error is a pretty generic "the application did a bad thing".
Elimination time.
Are you updated at least to Office 10.1.2? ("About Entourage" will report 10.1.1/Service release 1). If not, visit microsoft.com/mac, downloads, office X 10.1.2 combined updater.
(Don't delete these files, just move them someplace else for awhile. If moving one of them solves the problem, good; if not, you can put them back and preserve your Office settings & preferences.)
Quit Entourage. Try moving com.microsoft.Entourage.plist out of your home Library/Preferences folder. Try E again.
Quit Entourage. Try moving the entire Microsoft folder out of your home Library/Preferences folder. Log out/log in (resets MS database Daemon) Try E again. (That folder ahs a lot of Office preferences, so if removing it helps, you may want to experiment with individiual files to save any Office preferences / customizations /ACLs/ etc you've made.)
Use Entourage and select "Switch identity" (Entourage menu). Make a "New..." identity, re-enter account settings. See if that helps (if that helps, the problem is in your old database and you'll need to move your old mail, contacts and appointments over. LMK if that's the case.)
If none of that helps, backup your Documents/Microsoft User Data, Library/Preferences/Microsoft and Microsoft Office X/Templates folders. Try running Remove Office (from the Offcie CD's Value Pack), and repeat the Office installation (have your CD activation key handy to re-enter it, and re-apply the 10.1.2 combined updater.)