I ended up getting this to work(for the most part) by calling code on the document open event.
Code:
Public Sub Document_Open()
With ActiveDocument.MailMerge
.MainDocumentType = wdFormLetters
.OpenHeaderSource Name:="c:\mailmergetest\myheader.docx", Revert:=False, AddToRecentFiles:=False, ConfirmConversions:=False, ReadOnly:=True
.OpenDataSource Name:="C:\mailmergetest\mydatasource.txt", ConfirmConversions:=False
End With
ActiveDocument.ActiveWindow.View.MailMergeDataView = True
End Sub
The thing is for this to work you have to click the mail merge reset button and then save it otherwise you get the message that it is already a mail merge document.
I believe it has to be saved as a .docm as well.
In the end we stayed with the .doc format.
Hope this helps you.