Hi Nick,
I seems that Matlab 7.0 (R14) does not work with LabVIEW at this point. Try it wtih matlab 6.5.1 ! You will see that it works fine!
Additionally, to run a script node, LabVIEW uses ActiveX technology to communicate with the script server engine that is installed with MATLAB. However, the ActiveX components of MATLAB, including the script server, are not registered with the operating system when MATLAB is first installed. They are registered the first time MATLAB is launched. Therefore, when using a MATLAB script node in LabVIEW make sure that MATLAB has been launched on that particular machine and its ActiveX components have been registered with the operating system. After following this procedure, LabVIEW should be able to run the MATLAB script nodes without error, regardless of what directory MATLAB has been installed into.
I hope it helps.
Regards
TN