I was able to solve the issue by disabling Add-ins. This is what finally worked:
First, I went to the MS Word icon IN THE MICROSOFT OFFICE SUBMENU in the Start/Programs menu. I right clicked the icon, choose properties, selected the Compatibility tab and checked the check box "Run this program as administrator."
Next I started Word, answered "Yes" when prompted.
In Word, went to Options, Add-ins, at hit the button at the bottom of the screen to manage the Add-ins.
I unchecked the Add-ins, confirmed changes, then restarted Word.
Now I could make changes the Word options and they saved.
Next I reapplied the Add-ins and unchecked the "Run this program as administrator" in the Word icon properties under the Compatibility tab.
It's a pain to go through all those steps to change options, but at least I know it's doable now.
Curiously, I have this same configuration on other computers (same Add-ins) and can save Word options with no problems.
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