These instructions are for Word 2002 in Office XP. I
don't know whether they will work in other versions of
Word.
Highlight the picture by holding the cursor over it and
left clicking the mouse. Once highlighted and while still
holding the cursor over the image, left click the mouse
and choose "Format Picture" from the displayed menu. When
you see the window "Format Picture", look for the tab
that reads "Layout". Left click on that tab and you will
see new options. Choose the "Behind Text" option. The
window will close and your image will now have small
circles at the corner and in the middle of the sides. You
will also see a stem at the top of the image. That's for
rotating the image on the page. You can insert text boxes
and other graphics on top of the image in the same manner
as you use to make the image movable.
MB