At least part of the problem is that you're using a mix of formfields and content controls. You really should use one or the other. Formfields and forms protection is required for sharing with users of Word 2003 & earlier, which don't support content controls. Content controls work with Word 2007 & later and don't require any form of protection to work - at most they need only the 'no changes (read only)' protection with exemption areas marked. Although Word 2007 (which you appear to be using) doesn't have checkbox content controls, those can be simulated with dropdown content controls.

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Cheers,
Paul Edstein
[Fmr MS MVP - Word]