Yep, we've turned off auto-update.

The users are all sharing the same file, passing it around to work on their respective sections or review other's work.

The template and its path don't exist: it was created in 2008, on a local drive, by an employee who left the org in 2010.

I'm familiar with the auto-update feature and the trouble it can cause. We're trying to understand why, for one user, Word is having issues with linking to the ghost template and replacing it with Normal when numerous others, working in the same file, are not.

As I write this, it occurs to me that maybe it's related to where she is saving the file??