If text on your screen is underlined, but you didn't apply underline formatting to it, it could appear as underlined for any of the following reasons.
Red or green wavy underlines
When you automatically check spelling and grammar, Microsoft Word uses wavy red underlines to indicate possible spelling errors and wavy green underlines to indicate possible grammatical errors.
Red wavy underlines in an e-mail header
Word automatically checks the names in the e-mail header against names in the Address Book. If multiple names are found that match the name you type, a red wavy line appears under the name, indicating that you must choose a name.
Blue wavy underlines
Word uses wavy blue underlines to indicate possible instances of inconsistent formatting.
Purple wavy underlines (wavy vertical lines may also appear in the margin)
In an XML document, Word uses purple wavy vertical lines and underlines to indicate XML structure that does not adhere to the XML schema that is attached to the document.
Note XML features, except for saving documents as XML with the Word XML schema, are available only in Microsoft Office Professional Edition 2003 and stand-alone Microsoft Office Word 2003.
Blue or other color underlines
Hyperlink display text is blue and underlined by default.
Purple or other color underlines
Followed hyperlinks (hyperlink: Colored and underlined text or a graphic that you click to go to a file, a location in a file, a Web page on the World Wide Web, or a Web page on an intranet. Hyperlinks can also go to newsgroups and to Gopher, Telnet, and FTP sites.) appear as purple and underlined by default.
Red or other color single or double underlines (vertical bars may also appear in the left or right margin)
By default, newly inserted text is marked as underlined when the Track Changes feature is used. Vertical bars — called changed lines — may also appear in the left or right border of text that contains tracked changes (tracked change: A mark that shows where a deletion, insertion, or other editing change has been made in a document.).
Purple dotted underlines
Smart tags (action tags: Data recognized and labeled as a particular type. For example, a person's name or the name of a recent Microsoft Outlook e-mail message recipient is a type of data that can be recognized and labeled with an action tag.) appear with purple dotted underlines beneath text. You can use smart tags to perform actions (actions: Tasks that can be performed by using smart tags. For example, adding a name to a Microsoft Outlook Contacts folder is one action that might be taken with a person name smart tag.) in Word that you'd normally open other programs to do.