Please submit this as a support incident using Support site links for phone, email, webform, or chat, http://support.esri.com/en so we can help troubleshoot this issue. Please include software version and service pack installed for ArcGIS Desktop and Data Interoperability extensions.
I am having the same problem, although I am using an evaluation version of ArcGIS 10. I would appreciate some assistance in resolving this issue as the other extensions work perfectly.
Please confirm Data Interoperability 10 extension was installed AFTER installing ArcGIS Desktop 10. Have you installed Data Interop 10 SP1 as well? Data Interoperability Extension for ArcGIS 10 must be installed BEFORE you can install Service Pack 1.