Thanks for the quick reply, I'll give it a go.
"Are you using network home directories (ie is the user working off the network drive at all times)?"
I just want the user to save their documents on the home drive, but it seems like other cache's are getting saved there as well, and after going through the NHR website, I had the same problem of Office 2011 saying that the user doesn't have permission to save the file to the destination.
Still not sure why Safari freezes, when it will be the only application that I will try to run, but hopefully the Network Home Redirector fixes it.
To make the matter worse, they are connected wirelessly which I guess doesnt help with all that caches, but this is just temporary till next week.