(Note: these issues arise regardless of whether the document is opened from the library or via a direct link.)
When a user clicks on a .docx document in one of the libraries, a new IE window opens and the user is prompted to open/save. If the user selects Open, the toolbar icon for MS Word (if open) flashes and nothing else happens.
If the user clicks Save, the document saves to the location specified by the user. However, if the user double-clicks on the document to open it, the following message appears in Word: "[File name] cannot be opened because there is a problem with its contents." If the user clicks the Details button for more information, he/she is told "The file is corrupt and cannot be opened." However, if the user now selects the Open button, he or she is given the option to recover the contents of the document. The document then seems to open normally.
With .doc files, a new IE window opens, and the user is prompted to open/save. If the user chooses Open, word flashes and the user must know to go to Word in order for the document to open--a minor annoyance (training issue).
PDF files open normally in another window.