Description of the problem: After repeatedly having to go to the options menu to change how inserted text appeared and revision bar placement and selecting "OK" to save the changes, the selected settings were NOT applied to the document.

How to fix it: 
When entering these options, also select the "Strikethrough Deleted Text" (as shown as a Red S on the revision toolbar). When this mode is ON, Microsoft World also keeps the options settings set at the same time. Then enter the desired settings in the Track Changes Options, then press "okay." The changes to the settings will be retained.
Hint: You can restore the "Hide Deleted Text" using the Blue H in the toolbar.
 
This problem is most common in Microsoft 2003 but can occur in later versions of Word.