I must say that I have had my share of problems with installing older
software on newer PowerMacs. One thing that may work would be to copy an
installed version of Word onto an external HD (or server if you have one
now) and then just copy it from the drive to the computer that won't let
you install from the disks. I know this doesn't answer the question why it
doesn't work but it may allow you to run Word on all your machines.
About your computers not wanting to start up from the HD. We have some
7500/100's and they tend to do this once in a while. I've found that
reformatting the drive (not with the Apple CD utilities) with something
like Hard Drive Tool Kit by FWB works.
Good Luck!
Richard Pooran
Director of Information Technology
Lower Canada College
rich@lcc.ca