My observation (not an explanation) is that for an object anchored in a
frame, the text wrapping settings of Square, Tight, and Top & Bottom are
ignored, and the object behaves as if the setting is either Behind Text or
In Front of Text (whichever was most recently applied).
Also, if the floating object is anchored in regular text and the frame
overlaps it, the wrapping is ignored.
This behavior also occurs in Word 2003. I won't be able to check Word 2010
until later today, but that version may have fixed this.
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Regards,
Jay Freedman
Microsoft Word MVP
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