This process, known as slipstreaming, involves making the Service Pack 2 RTM an integral part of Office 2007 installation.
After you have downloaded the service pack two (SP2) file from Microsoft. say save to c:\
Copy entire content off office 2007 cd to a folder on computer say: c:\office2007
Now we need to extract the sp2 download
Create a folder on your computer say: c:\sp2
Next you will have to launch command prompt. Run as administrator (right click on cmd.exe for run as admin option), to enjoy full privileges. Next you will need to run the following command
CD c:\office2007sp2-kb953195-fullfile-en-us.exe /extract:c:\sp2
(change locations if you have used different from my example locations)
During the extraction process you will have to agree to the End User License Agreement (EULA), but otherwise you need to do nothing.
Once the Installer is done you need to move all the content of the c:\sp2 folder to the Updates folder in the Office install folder (c:\office2007\updates), and this is pretty much it.
The result can be burnt on a DVD (integrating the upadates usually increases to office2007 quite a bit and will not fit onto a 700mb cd)
or save locally or on a network share to install across a network
Neil 