If you see the words "Compatibility Mode" in the title bar next to your document's name, you are working in a older file format. This happens in both the 2007 and 2010 Office Suites. Although it is fine - and sometimes necessary - to stay in that mode, you might discover that some of the tools you want to use are not available. When that happens, you will need to convert your files to the newer file type. If you have concerns that something in the document might not appear the way you planned or work correctly, use the option to "save as", give the document a new name, and save. This way you can review your work in the new file yet still have the ability to revert back to the older file if you discover any issues.
For those of you that fearlessly forge ahead, another option is to use "Convert", which will actually replace the original file with the newest type:
• In Office 2007, "Convert" will appear as the third option of the Office Button menu.
• In Office 2010, "Convert" will be the top item in the Info category which appears in the backstage view when you click the File tab.
By the way, you will find that even if the file was created in the 2007 XML file format, you will still need to convert files when you upgrade to 2010 due to the enhancements available in the newest software!
