Ignoring the error message which I don't pretend to understand I suggest you try the "cure all" which often works with Word problems.
Search for Normal.DOT in Word97 folders and delete it!
You will lose personal settings, but next time you open Word, it will make a brand new file of normal.dot which is a lot more important part of Winword.exe (and all that follows) than a simple template would appear to be.
N.B. Be sure that it is Word's own normal.dot and not part of another application altogether.