I had the same experience with XP + Office 97. I think MS would very much like you to buy Office XP although personally I didn't like it one bit compared to 97. I tried disabling most things too but it didn't make that much difference, the problem is XP not Office 97. The only thing I can suggest is exporting text from text files (.txt) rather than doc files (.doc) where you can, as it seems to read them without going crazy on the system resources. Hope that helps slightly. Needless to say a 'downgrade' to Windows 98 will solve your problem completely.
Also try disabling these options, as every time new text is imported it will run these: Check spelling as I type, always suggest corrections & check grammar as I type.
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