Dynamic formatting is a CSS-html-trick (or xml). Or use SGML or any professional tool to separate contents from lay-out. Word isn't the right tool for that.
Word keeps the formatting it has. Ain't that a nice feature (in general)?
What you can try: open a new document, based on the new template (say, the current version of quiz.dot, exam.dot or lab_exercise.dot). Copy/paste the contents of the old document into the new one and see how it works out. I've never done that, but it would be interesting to read in your answer what it does.
Hope this helps.
I teach Chemistry and use WORD to write exams, quizzes and
Lab exercises, etc.
I have set WORD to work as I want.
However, old documents revert back to the Formatting they
were saved at.
Is there some way to make WORD overwrite the old formatting
when it opens an older file with different formatting and write
in the new formatting style...?