I'd create the template from start, especially since the document you have now has "lousy" formatting. For more, start with the articles at
http://word.mvps.org/faqs/customizat...platePart1.htm and
http://www.shaunakelly.com/topic/word/styles.
To clean up the original document: Save a copy of the file for reference. Then apply Normal style to all text. Copy it into a newly created document based on the template that you created.