A couple of other readers (especially Shane Palmer) suggested a conflict between Word and Microsoft's own Explorer 4.5 as the cause.
Finally, a few readers confirm that they have the problem even though they do not use GoMac, suggesting that it is not the critical (or at least not the only) cause of this freeze.
Update: Paul Mayer found that this fixed this problem for him: "Remove all of the MS libraries in the Extensions folder, apply the all-in-one MS Office Update patch and start Word, letting it copy what it needed back into place. You may also need to trash the Normal template."
Word 98 Save bug Meanwhile, regarding the MS Word Save bug (also covered here recently), a couple of readers confirm that Mac OS 9 will "solve" this problem by increasing the maximum number of open files from 348 to 8169.