How to enter Chinese characters and how to type them vertically?

[Peter]

Do I need to have an external program to enter Chinese characters in MS Word
2003 or later on Windows XP or later OS? How to type them vertically?

 

[grammatim]

Windows, not Word (so have your Windows installation disk ready).
Start > Control Panel > Regional and Language Options > Languages >
check the box about East Asian languages; it should ask you to insert
the disk, and it adds the CJK capacity. Then > Details > Add and pick
the Chinese of your choice.

I'm not sure about the vertical typing, but in the Format > Font and
Format > Paragraph panels, there's an extra page for Asian typography;
maybe also in Page Setup.

Go to the Microsoft website for documentation.