I can only think of three things that may have caused this.
What version of Outlook Express are you using?
Have you attempted to reinstall OE or upgrade to OE6?
One: The CUSTOM.DIC file doesn't exist in the proper folder. There needs to be a CUSTOM.DIC file located in the OE folder, I don't know which one since I have Outlook installed and the OE on my system pulls the CUSTOM.DIC from there. I was however under the assumption that the program would just create the CUSTOM.DIC file if it didn't exist.
Two: Somehow PictureIt associated file types of *.dic to its program. You'll need to reassociate the file type to notepad. If this is even the problem, to reassociate a file type just open up My Computer, click on Tools and select Options. There should be a tab called File Types. Locate the DIC extension and reassociate it.
Three: There may be a registry entry that is interfering with the proper execution of the spell check program in OE. Is PictureIt even installed on the system? If it is uninstall it and OE. Then install PictureIt first, then OE second. This may help smooth out any registry conflicts that occured in the past. If PictureIt is not required, remove it all together along with OE but only install OE back on the system.
If PictureIt has already been uninstalled you can attempt to cleanup the orphaned reg entries, if this is a Window 9x or ME system this regcleaner is as good as I've ever found: http://www.worldstart.com/weekly-download/archives/reg-cleaner4.3.htm
