Not enough memory or disk space for picture

Gang,
I just had 2, possibly related, problems with Word. I'm running Office
10.1.5 on a G5 Mac that's running Panther (the latter of which was
installed as an "upgrade" and not as an "archive and install," if that
makes any difference for this issue).

The two problems:

1) I had Word running already with a document open. I was in the
Finder and double-clicked a different Word doc. The "ghost" Word
image appeared briefly as would normally happen when opening a doc,
and Word came to the front, but the doc never opened in it. I then tried
using File>Open from within Word, and the doc opened just fine. So I
closed the doc, and tried again from the finder, again with it failing to
open.

I then tried double-clicking several other Word docs in various folders,
and none of them would open from the Finder.

So I quit Word, then double-clicked one of the files and they opened
just fine.

Problem solved, right?

No.

2) Well, the first doc I tried unsuccessfully to open, above, has a picture
embedded in it, just a fancy text graphic, nothing big (the entire Word
doc is only 36k). I saw it when I opened it the first time from within
Word.

But now whenever I open it, I get a message saying "There is not
enough memory or disk space to display or print the picture" and the
box where the pic should be is empty. Further, if I hover the mouse
over it, it turns into a hand, and a pop-up says "hyperlink." There is no
link there (ctrl-click and select edit hyperlink). Even further, the
contextual menu has an option to edit picture or to show the picture
toolbar, neither of which does a darned thing.

Relatedly, in the View>Toolbars menu, there is no "picture" option, but I
don't know if there normally is one there, anyway.

Still, what's going on here? The picture displayed properly once, and
now it says it can't be displayed due to lack of memory or disk space
(neither of which is true).

Thanks for any advice,
_dennis