Right-click on the START button - Properties - Taskbar - Group Similar Taskbar Buttons
That applies to Windows XP, not to Windows 7.
If I click on the minimized documents to open them again, they open and stay open. why I am seeing a button for each open document in the Task Bar.
I think your usage of "open" is not technically correct. I believe, under general usage of the term, a minimized document is open. What you really mean, I believe, is maximize a Word file that is open but minimized.
I have Office 2003 installed on a netbook running Windows 7 Starter but, if I understand your issue correctly, I don't know what would cause that or how to change it. Can you post a screen capture of the Word buttons on your taskbar so that we can be absolutely clear on what you're describing?