Have they chosen the correct option from the CD when up-grading? there are several options to choose from, New account/new PC/same account/ same PC. Up-grade of present version to new, or add new to existing, and a few more as well.
If they have chosen the correct one, then the CD will have connected them to AOL automatically, with the only input being to confirm Username and password.
Not sure about the second one, except that the shortcut has been associated with, "My Computer some how.
Delete the shortcut, and make a new one from, Start/programs/Word. Right click on program name and choose "Send to desktop as shortcut". j.