The PUBLISH command attempts to start up Word as a COM server to perform the operation, so I think the real problem here is that MATLAB is unable to do that. You could verify this by running this command at the MATLAB prompt:
h = actxserver('Word.Application')
What error do you see?
Also, do you run MATLAB as administrator? Another option is to try starting Word as a COM server outside of MATLAB (potentially using a VBA script) to see if that works.