Okay, it appears you have a system good enough for any InDesign task.
The source file is Word 2000 and is index entry heavy.
How heavy are we talking about here? This may be bersome but I guess I could suggest you paste the text from your word file to a Notepad doent.
From notepad to InDesign - Paste to the publication.
Go into the story editor and add the index entries the way I think it should have been done in the first place. Select the text and (assuming you have not changed the shortcut) pressing Ctrl+Alt+U for each of them?
Do you think there is a problem (some sort of corruption) in either the
Word source file or our InDesign template?
Not sure but I suspect that the problem lies in the conversion of the MS Word Doc.
On advice from others, Iíve tried copying and pasting the doent into
InDesign, but that has exactly the same effect as placing it (the index
still won't generate).
Perhaps what you are experiencing is something simillar that happens with ID too. I know when I used to work with PageMaker, MS Word and PM did not play well with each other. This is why I suggested going from Word to Notepad. It strips the text of all the custom styles, entries, etc. Don't know if you have lots of styles and such you planned to keep but as I can see you've done a copy paste from Word to ID. Try from Word to Notepad to ID and see if that works. I have a good feeling about this.
Does anyone else have problems generating an index?
Not really, the only times I really have problems is when I try to make one from Greek, Russian Japanese or Czech. Basically, I have trouble making an Index or TOC when I'm using a font that includes glyphs and characters that are not available on a standard font. Fonts like Latin, Cyrillic, Asian, etc. I think the standard is known as Western Europe ISO??? Not sure but I think you get the idea right?
After I make index entries using these languages, what happens is InDesign does not fully support these special characters. I take a look at what is entered in the Index by viewing the Index palette and it's all giberish. I suppose this is due to the Index not being Unicode compliant but after speaking with Tech support they told me that there is no fix as of now and I should purchase from WinSoft instead. Hopefully when the next set of patches comes in they will include something for this.
Please let me know if the suggestion works for you.