Just a thought...

Can you open the file on another computer? I would attempt to do so. If the attempt fails, then you know that it is a problem with the file, rather Winword.

There are a few free/share-ware programs out there on the Internet to unlock these files without a password. You may want to look into this.

Sorry I am not much help. I have never encountered this before. It seems to be most logical to suspect the file.

Another option you might try is to create a new document with password and attempt to open it. Or copy the document and try to open the copy (under a different name).

These are all ideas to help you troublshoot the possibiliy of file corruption or winword problem. I would be very interested in the solution.