Beth- I just experimented with Bold and/or Italics as well as the Underline function. With luck, and if you don't try to italicize the word "italics" or embolden the word "bold" it usually works right.
Even then, it is necessary to inspect the result as you go to make sure the braces don't end up in the middle of a word. It seems better on long sentences than on single words.
I then renamed a short sample report from a RTF file to a text file and opened it in Word97. Wow! So many backslashes, so little time. It might be that the best you can do with your problem text paragraphs is to copy and paste them out and back in to the text boxes and see if that clears us the formatting problems.