The error which took us a while to figure out to fix. As any mysterious error around this one also took a while to crack it. However the exception was IsolatedStorageException. We weren’t able to find the cause of the error.
Isolated Storage: It is a disk location on server which is used when the processing of document size is bigger or a complex document structure, this was our interpretation. The definition says “Isolated storage is a storage mechanism that provides isolation and safety by defining standardized ways of associating code with saved data.” You can find the details @ here
Then we got this stackoverflow link http://stackoverflow.com/questions/19465653/openxml-and-unable-to-create-mutex
We were not comfortable with accepted solution because It requires running IIS with elevated permissions which is a security weakness. May be we should have done further research on the Isolated storage and where the file location is created, however after going through the same link couple of weeks later we found another solution which mentioned something about to set Load User Profile to True. That solution worked for us.
What we learned from this mistake is one has to go into the technical detail of an issue and read all available material related to topic and do appropriate research before concluding the issue.