Infopath forms in Sharepoint

Hi Experts,

I have been setting up our Sharepoint Intranet which came with SBS 2003 and hit a problem with a timesheet module that i have downloaded from microsoft -  http://www.microsoft.com/downloads/details.aspx?FamilyId=8FB33404-13E0-424B-A75E-DD517E85263B&displaylang=en.  

When I go to use this and look at the forms I get the following message "This feature requires Microsoft Internet Explorer 5.0 or later and a Windows Sharepoint Services-compatible XML editor such as Microsoft Office Infopath"

On my PC I am running Windows 7 and have set .xml files to be opened in Word under Default Programs.

The questions i have are -

1) Should I be able to open the XML file in Word?
2) If I purchase Infopath for my PC am I able to open the xml form and save it in such a way that other people cna edit it without Infopath.
3) Refering to question 2 if I want other employee's to open the from in a web browser do i need to install Inopath from services on my server that is hosting sharepoint?
4) Is there another alternative that i could use for employee timesheets other then the one I have downloaded where I don't need to upgarde any software?

Cheers

Roofin