Thanks for the help Don. The problem is not document specific, I can create a new document, add a multi-level numbered listing like this:
1. Section 1
On the Insert tab, the galleries include items that are designed to coordinate with the overall look of your document..
(a) Section 2
You can easily change the formatting of selected text in the document text by choosing a look
for the selected text from the Quick Styles gallery on the Home tab.
(i) Level 3
You can also format text directly by using the other controls on the Home tab.
Most controls offer a choice of using the look from the current theme or using
a format that you specify directly.
Attempting to change the level for section 2 or level 3 using Shift+Tab simply causes Word to add a sub-level, two becomes three, three becomes four, etc. Again, we have tried different keyboards, new docs, old docs and checked the settings under auto-format as you type. Could there be another machine specific setting or registry setting that causes Shift+tab to behave as a tab only key?