Do not let me lead you into a headache under false pretences: this FAQ is not going to tell you how to fix a document that contains broken numbering. It simply explains how the numbering works: this is valuable information if you work with Word a lot, and by understanding it, you can often work out how to fix a document. However, this FAQ is not going to tell you how.  (For a discussion of methods, see: List Restart Methods).
Another fan of Fusion Pro Desktop here. This is exactly what you need. We have sold both PrintShop Mail and Fusion Pro Desktop for this very application (numbering) and other VDP applications. Fusion Pro Desktop easily beats PrintShop Mail from both a price and performance viewpoint. You could also try Printer's Bench for a good entry level package
In bulleted lists, each paragraph begins with a bullet character. In numbered lists, each paragraph begins with an expression that includes a number or letter and a separator such as a period or parenthesis. The numbers in a numbered list are updated automatically when you add or remove paragraphs in the list. You can change the type of bullet or numbering style, the separator, the font attributes and character styles, and the type and amount of indent spacing.

If the list you want is as simple as "1", "2", "3", you'll appreciate how easy it is to apply this type of numbering in legal documents. Simple numbered lists are different in Word 2000 than they were in Word 97. In Word 2000, the default for even the most basic list is multi-level. For example, if you number an item and press Enter and then press the TAB key, Word automatically formats this number as the second level in an outline numbered list format. Single and multi-level numbering are explained later in this chapter.

	Word's Numbering Explained by John McGhie, MVP - comprehensive and not pretty (Downloadable pdf file in letter size) - Reading this is vital to anyone attempting to use automatic numbering or bullets in a law office setting or other places where the documents are likely to be reused or heavily edited. See also How to Create a Template with a downloadable template with style-based numbering. I strongly recommend that you read both of these before doing anything with the contents of this chapter.

One of the easiest ways to begin applying numbers is by starting to type a numbered list. Word recognizes that you are creating a list and responds accordingly by converting text that you type into numbered items. The number scheme, delimiter characters that mark the beginning or end of a unit of data and formatting are all based on what you have typed.
Drag the number, which Publisher defaults to “1,” into place on the ticket. To change the sequence, such as to start with “100” instead of “1,” click the “Page Number” button again and choose “Format Page Numbers.” Click the “Start this section with” radio button and type the new number into the field. Click the “OK” button to have Publisher update the ticket number.

Using previously un-used heading levels would be more suitable for situations where you want to maintain two separate numbered lists that both make use of the "magic" properties of the built-in headings; for example, this would be the case when you set up appendix numbering as discussed in the article at
Changing the numbering display affects how pages are indicated in the InDesign document, as in the Pages panel and in the page box at the bottom of a document window. The numbering display also affects how you specify page ranges when printing and exporting the document. However, the numbering display does not change the appearance of page numbers on document pages. numbering in indesign