"Email" icon in word 2003 grayed out and I do have an email account set up through Outlook.

I had this exact problem, look here:
http://help.lockergnome.com/office/Word-2007-greyed-ftopict938539.html

more specifically, here is the microsoft KB:
http://support.microsoft.com/kb/918792

Word 2003 not 2007. This KB specifically applies to 2007 software.

I realize that. The "Method 2" portion applies to 2003 as well, I know this because it worked for me, with an office 2003 machine. it's those mapi.dll and mapi32.dll settings in the registry that are the issue. here it is:

Method 2: Verify the registry settings
Important This section, method, or task contains steps that tell you how to modify the registry. However, serious problems might occur if you modify the registry incorrectly. Therefore, make sure that you follow these steps carefully. For added protection, back up the registry before you modify it. Then, you can restore the registry if a problem occurs. For more information about how to back up and restore the registry, click the following article number to view the article in the Microsoft Knowledge Base:
322756 (http://support.microsoft.com/kb/322756/) How to back up and restore the registry in Windows
1.      Close all programs.
2.      Click Start, click Run, type regedit in the Open box, and then click OK.
3.      Locate and then click the following registry subkey:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows Messaging Subsystem
4.      Locate the following registry values. Typically, these values are listed in the Windows Messaging Subsystem key.
Name      Type      Data
MAPI      REG_SZ       1
CMC      REG_SZ       1
CMCDLLNAME       REG_SZ       Mapi.dll
CMCDLLNAME32      REG_SZ       Mapi32.dll
MAPIX      REG_SZ       1
MAPIXVER      REG_SZ       1.0.0.1
OLEMessaging      REG_SZ       1
5.      If any of these registry values are missing, follow these steps to add the values:
a.       Click the Windows Messaging Subsystem subkey, point to New on the Edit menu, and then click String Value.
b.       Type the name of the missing value, and then press ENTER.
c.       Click the new value, and then click Modify on the Edit menu.
d.       In the Edit String dialog box, type the correct value for the missing string value in the Value data box.
e.       Repeat steps 6a - 6d for each value that is missing from the table that is in step 4.
6.      On the File menu, click Exit.
Typically, Excel 2007, PowerPoint 2007, and Word 2007 display the correct e-mail options automatically when the required registry keys are present. If these programs do not display the e-mail options after you use the methods described here, add the e-mail options to these programs. To do this, follow these steps:
1.      On the File menu, click Program Name Options.
2.      Click Customization, and then click All commands in the Commands list.
3.      Click the command that you want, and then click Add to add the command to the Quick Access toolbar. For example, click Send for Review, and then click Add to add the Send for Review command to the toolbar.
4.      Click OK.

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basically, the office button asks windows what program is used for emailing (via those .dll files pointed to by the registry). When you install full office (with outlook), these settings won't be present until you create an email account in outlook. If for some reason outlook doesn't make those settings, the association between word - windows - and outlook is not complete, and these registry entries must be manually entered. This also applies when you are using a non-outlook email program (like thunderbird). Adding the .dlls make this function work with TB as well.

OK, I will give it a shot. Thanks for the explanation, that makes sense.

Dm

Ok, I looked at all the registry settings, and they are all correct. Everything you had me looked at is correct.

I did try and click on (in Word) File-SendTO-Mail recipient (or review) and (as attachment). It spits out this...(see below) which makes me believe it IS something with the MAPI\Word connection. What do you think?

 
Details                
Product:      Office         
ID:      10092         
Source:      OfficeErrorMessages         
Version:      11.0         
Message:      Links to additional information about the error message you saw are available below.       
 
               
Currently there are no Office Assistance articles available for this error message.                
This error can occur if you attempt to send a Word document as an e-mail attachment in Word and the MAPI session was closed and Word is no longer able to connect to that MAPI session, or there is a problem with the fax configuration.
To correct a MAPI related error: restart the MAPI e-mail program (for example, Outlook) or save and close the document, and then restart Word after restarting your MAPI e-mail application.  Word will establish a new MAPI session, allowing the document to be sent.
To correct a problem with the fax configuration, review the configuration settings for your fax software and make the appropriate changes.
More information about this error message online.

It sounds like you are on the right track... so in that Windows Messaging Subsystem folder in the registry, you have:

Name      Type      Data
MAPI      REG_SZ       1
CMC      REG_SZ       1
CMCDLLNAME       REG_SZ       Mapi.dll
CMCDLLNAME32      REG_SZ       Mapi32.dll
MAPIX      REG_SZ       1
MAPIXVER      REG_SZ       1.0.0.1
OLEMessaging      REG_SZ       1

-------------

also, i just found this:

Had the same issue. The answer was to go tools/options/mail format. UNcheck "Use Microsoft Office Word 2003 to edit e-mail messages"

and this:

find the WIN.INI file in your Windows folder (typically
>>>>> >> c:\WINDOWS),
>>>>> >> make a backup copy of it, and open it in Notepad.
>>>>> >> b. ensure that the following text is in there, and add it if not
>>>>> >>
>>>>> >> [Mail]
>>>>> >> MAPI=1
>>>>> >> CMCDLLNAME32=mapi32.dll
>>>>> >> CMCDLLNAME=mapi.dll
>>>>> >> CMC=1
>>>>> >> MAPIX=1
>>>>> >> MAPIXVER=1.0.0.1
>>>>> >> OLEMessaging=1
>>>>> >>
>>>>> >> You will need to close all copies of Word before this change has a
>>>>> >> chance
>>>>> >> of
>>>>> >> taking effect. It is probably safest to restart Windows to be
>>>>> >> completely
>>>>> >> sure.

Ok. I read that stuff from the first two links that came up on google. Both methods are correct on our machine. Each step is correct and all the numbers and words are identical. I even blew out the profile in outlook and re-created it to see if that was it.

Also, like i said before, both boxes are unchecked when it comes to the mail editor. It always has been.

I ended up un-installling Office 2003, and the access 2000 that was installed (this might have had something to do with it?) and re-installed and it is back and working fine now.