This looks like a corrupted font. It's unusual and might be difficult to find.

You can try (1) to repair or (2) uninstall/install Word, or (3) use the Office 2003 Removal Wizard (can be downloaded from microsoft) to erase Office completely, then reinstall. It won't hurt, as long you have the Office XP CD at hand.

Can you do a system restore to a previous state when things still worked correctly?

Or consider contacting Microsoft. They might tell you what fonts to uninstall/reinstall in Config Panel>Fonts.

Kees