Archive and Install choice
This option moves existing system files to a folder named Previous System, and then installs a new copy of Mac OS X. This option is available only for volumes with Mac OS X already installed. Usually, if you select this method, you will want to also select (check) "Preserve Users and Network Settings" which imports existing user accounts, home folders, and your network settings into the new system.
Archive and install will only replace the system files, not the users home folder in which the office files are stored in. So in other words, you have nothing to worry about.
The global Applications folder is at the root-level of your hard drive. It is undisturbed by an Archive and Install reinstallation of the OS.That's a bit confusing. Aren't the actual applications of MS Office stored inside the Applications folder, which is outside the Users, thus Home folder?
Before I do an archive and install, if it stores everything in a previous systems folder, when I start up my computer, will I have to do anything, or will it automatically start up from the previous systems folder?
No. The point of Archive & Install is that you do not have to have to create a new account and you do not have to setup everything. Most of your settings reside in your user directory which is untouched. Immediately after an Archive & Install, should should be able to get back to work.So I will have to create a new user account and re-setup everything? ...