Hi Caroline,
Glad to see you got it sorted. Whenever you see text representations of field codes, with the '{ }' or '« »', that almost invariably means you need to insert a real field at that point. The chevrons (ie '« »') represent mergefields as they appear when inserted from the mailmerge toolbar
There is another way, other than using Insert|Field for creating fields, and that's to press Ctrl-F9. For your particular example, you could simply press Ctrl-F9 twice to create a pair of nested fields (ie '{ { } }'), then fill in/around the field braces with the required expressions. And, if you find a complex field that you want to re-create, head over to:
http://www.gmayor.com/export_field.htm#TextToField
for a macro I developed to convert the text representation to a working field.
FWIW, you don't need the \* MERGEFORMAT switch, either.