I've seen this twice - an installation of Skype Click to Call (which I think is mostly useless anyway) keeps MS Word 2007 from copying and pasting normally. In my most recent test, I opened a Word doc and edited the font size and font color. I copied that text and went into a new document. I pasted it and all formatting was lost. I went into paste -> special on the new doc, and the only two formats I could paste in were forms of unicode text (rich text and/or HTML or others not there).
After removing Skype Click to Call, I could copy and paste normally between Word documents.
