Firstly, thanks for Russ at Manta Ray Media for doing the Google leg-work on this one.

Apparently the new(ish) Microsoft Office .docx file extension (in fact, all the new .foox file extensions) is read by Internet Explorer 7/8 as a Zip file when being served by an Apache web server. This is because the sent headers from Apache are incomplete and IE gets confused and thinks it is receiving a zipped archive, not an Office document. (Isn't it wonderful that only Microsoft's browser gets confused by Microsoft's file formats!)