Hi Phippsy,
MS removed he 'Add to Favorites' option in the File=>Save dialogs.
You can save a document in the Favorites by clicking on
that icon in the Places Bar. You can also add a shortcut
to a document you've used by clicking on the Places Bar
Recent Documents icon and copying or cutting the shortcut
of choice then changing to Favorites through the Places Bar
and using paste to put it in the Favorites folder of your choice
or in File=>Open right click a document, create a shortcut then
move that shortcut to the Favorites folder. You can also, with
the shortcut on the clipboard paste in to My Favorites from
Windows or Internet Explorer
You can also add an icon inside of Word from Tools=>Customize=Commands
to the All Commands=>Web Open Favorites or use the
Word Web Toolbar from View=>Toolbars
There are 3rd party products that can enhance the right click
menus for favorites and other folders, such as
http://www.bytegems.com/quickfolders.shtml
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I know how to customise the My Places bar but I am not getting the option on
the drop down list on the Tools menu. >>
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Let us know if this helped you,
Bob Buckland ?

MS Office System Products MVP
*Courtesy is not expensive and can pay big dividends*
For Everyday MS Office tips to "use right away" -
http://microsoft.com/events/series/administrativetipsandtricks.mspx