Definitely uncommon. Never heard of it. As far as I know, it's not a setting.

Things to try (and post an answer about, if necessary):
1. Try other wordprocessing program (like Wordpad or Notepad). Same?
2. Try other MS Office program, if you have it (Excel, Powerpoint). Same?
3. Use My Computer to find your default template (a file called normal.dot, somewhere in your Documents and Settings) and delete it. It must be there, even if you can't find it immediately. Same?
4. Do a repair install of MS Office from the Office CD? Same?
5. System restore back to when it still worked. Same?

Kees