Several readers have now confirmed that crashes (especially Type 3 errors) associated with Word 6.0 and Mac OS 7.6 can be traced to the Office4.2x Update for Power Mac extension (confirming a previous report). According to Scott Schaus, Microsoft told him that the extension was still needed and that the latest version should work. However, if you are having problems, try removing the extension to see if it helps.
Update: While it may still leave you confused as to whether or not you should use this Update extension, Paul Hitchcox points out that Microsoft has a file that describes its recommendations. This is essentially the same information contained in the MacFixIt Report on Troubleshooting Type 11 and Related System Errors.