Application cannot find COM Component

All,

I've got an application that is calling another class in application (.exe). The calling application is using "Set XXX = CreateObject("POSUpdate.Puppet").

In debugging, when I step thru the calling application, the error message that is returned "Can't Create Object".

Now here's the strange thing. If the called application ("POSUpdate.Puppet") is also running in debug mode. Everything works fine. No errors are encountered.
It's only when the called application isn't running that the above error is encountered.

I've looked in the registry, and all the entries for the called application appear correct.

Once again I'm scratching my head and need help from the experts here.

Thanks!