I have been trying to set up the list from Shauna's instructions. She uses the Multilevel List and says do not use the other options. I see from your deleteme.dox that you are using the Numbered List. Do you prefer this?

When I follow her instructions, on the Headings 1-9, I get

1:00
1:01
1:01
1:01
and don't see how to progress to 1:02, 1:03, 2.00, etc.

(BTW, I have just installed Office 365 but I don't think this will be too different from 2007.)