Sorry it took so long to answer. I wasn't near my netbook that had 2007 installed.
The answer to your question about line and paragraph spacing is easy. It's a Microsoft recognized problem and they tell about their solutions in http://support.microsoft.com/kb/921174.
The Word options are hidden under the Office button (the big one top left) and then an 'Options' button at the bottom right (next to the Close button). Specifically, http://wordprocessing.about.com/od/microsoftword2007/qt/autocorrect07.htm tells about autocorrect. You might also like to read http://support.microsoft.com/kb/926927 and http://www.pcmag.com/article2/0,2817,2269768,00.asp.
In general, you might find http://office.microsoft.com/en-ca/word-help/ useful. It has different tabs for Office 2010, 2007 and 2003. And, finally, http://www.youtube.com/watch?v=XUg6VrznllA demonstrates where to find the help that's built into the program.
At work, we still use Office XP (=2002). At home, I switched to 2003. I only installed 2007 on a laptop because some students sent documents that didn't turn out right in the old 2000 version and I could download (yes, officially) a free Office 2007, which worked. But I find the the learning curve is rather steep for anything but basic editing (in fact, I only use it to read their reports, if necessary).
At work, however, we use Outlook 2007, which is configured to use Word 2007 as it's editor for messages, and I manage quite well to write e-mail messages with it. I even found out all on my own how to show the ruler (while calling the helpdesk about it): click the button right above the vertical scrollbar.
So I have some hope that switching to Word 2007 isn't hopeless, just a nuisance. But, indeed, I needed Google to answer your questions. So I'm glad you asked here, because I learned something myself by answering.
Kees