I have done some more testing and this post has been modified to reflect changes:
In an earlier post, I blogged about code formatting in Word 2007. Since then, Andy has posted about using Windows LiveWriter. So I download LW, and a couple add-ons and give it a whirl. IMHO, it is not as feature rich as I would like; I was not impressed. I continued searching and found Peter Gekko's post about CopySourceAsHtml.
Unfortunately, while close, every line is surrounded by a paragraph element, thereby destroying the layout. And where there should be an empty line, it is also represented by a paragraph. I'll download the source and see if I can fix this. If so, then I can copy source from Visual Studio, paste it into Word 2007, and forget about it.
Updated: It seems that I was very mistaken. The problem does not lie within the CopyCodeAsHtml add-in as I suggested. I copied text within Visual Studio with CopyCodeAsHtml, pasted it into Expression Web, and was pleased with the results. I then ran Microsoft Network Monitor 3.0 while posting a message, and it seems that Word 2007 is reformatting the <P Style="Margin: 0px;"> into <P style="BACKGROUND: white">. I also found that there is a setting, "Wrap Words", which if turned off replaces the <P/> with a <pre/>. But Word 2007 is also replacing the <pre/> tag with <p style="background:white;">. So, Word 2007 seems to be the culprit, and I'm still searching for a resolution.