What is it?
Packager.exe is a windows application that came about with windows 95 it is normally located in the WINDOWSSYSTEM32 directory

What does it do?
When an OLE client creates an embedded object from a dropped file, it inserts a packaged object that refers to the dropped file. The OLE server for a packaged object (an object of the Package class) is the Microsoft Windows Object Packager (PACKAGER.EXE) application. Packager supports associating a command line, a file, or an object with an icon.

More Info:
http://support.microsoft.com/default.aspx?scid=kb;en-us;86270