When you upgraded to OS X 10.1, you entered into a whole new world. In OS X there is NO chooser. You appear to be going back to OS 9 every time you launch Microsoft Office.
None of your OS 9 software will work with OS X and that includes Office. To run Office under OS X, you will need Office for Mac OS X.
A few more details would be nice for your equipment.
Is it a beige G3, how much RAM, has the processer been upgraded?
OS 10.1 was not a very good or stable version and will NOT be a very good present for your brother in law. 10.2 was OK but 10.3 was considered to be much better than all of them.
Pass along the information and we'll see what we can do to help you out
P
I have a powermac g3 that had mac os 9 and microsoft office 6, which I upgraded to 10.1. However, once I loaded the 10.1, the printer does not stay in the chooser. Is there a solution to this? Microsoft Office opens, but it will also give me a error message of -5551 and says to select a printer from the chooser. When I go to the chooser, the printer is not there. Help. This is a present for my brother-in-law and I really would to like to make this work properly.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic