Mail merge problem with Word for Mac and Excel for Mac

I am using Mac OS X 10.8.3. I downloaded Word and Excel for Mac Version 14.2.0. I am trying to use the mail merge feature and every time I choose my Excel spreadsheet (in .xlsx format )as my "open data source" a pop up window tells me it has to be converted. In choosing every option given to convert, it tells me the file cannot be read. I tried saving my Excel spreadsheet in .xls format and it still doesn't work. I am sure my Excel spreadsheet is formatted correctly. Is it just not possible with this version of Word and Excel or is my OS dated???? Please help. This is driving me crazy