I would first try the autoformat feature to see how Word can apply styles to the content. Once you have styles assigned it should be a lot easier to configure the numbering to align with your preferred list levels.

I put the Autoformat... button on my Quick Access Toolbar to make it easier to access this feature. The dialog includes an Options... button where you can choose what the Autoformat actually does.

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Andrew Lockton
Chrysalis Design, Melbourne Australia