Before editing the list, did you remember to open the template as a document (as opposed to double-clicking the template so that Word creates a new, unnamed document)?

Once the template file is open, apply a numbered heading to text and then click Home | Multilevel List | Define New Multilevel List. In the dialog box, make the desired changes. When you are done, click dialog boxes with OK. Save and close the file.

Note that changes made in a template applies to future documents based on that template. Existing documents must be dealt with one by one.

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Stefan Blom
Microsoft Word MVP

Microsoft 365 apps for business
Windows 11 Professional