Looking at Word 2003 here. I see no need to insert a text box within a text box. Merely clicking on the text box button on Word's Drawing toolbar (menu entirely different in Word 2007, of course) one time creates a box within box. The outer box would be invisible unless you format it to choose other colors and type for Line and choose a Fill color.
Here's an image of a test file in Word 2003:
Again, this comes from just one instance of adding a Text Box by clicking on the Text Box button.