Hi @Steve Chaney
Thank you for reaching out to the Microsoft Q&A Forum.
I understand you're having trouble inserting a picture inside a Text Box in Word 365. The Wrap Text option is grayed out and unusable, which forces the picture to remain "In line with text." This is the default behavior in Word. The Wrap Text feature is designed for the main document's text to wrap around an object (like a picture or the text box itself). When you place a picture inside a text box, it is treated as part of the text box's content, not as an independent object that the text within that same box can wrap around.
Please try to use a one-cell table instead of a text box > Go to Insert > Table and select a one-cell table (Make the table position like a text box) > Insert your picture into the table cell > Right-click on the table and select Table Properties > Around button to allow text to wrap around the table.
Or you can try another workaround
Please try to use a Shape instead of a text box: Go to Insert > Shapes > choose a Rectangle > Draw the shape > Right-click the shape and choose Add Text > Insert your picture inside the shape, not a text box > Now select the picture, and you should be able to use Wrap Text options.
I hope this information can help you to solve your issue soon. If the issue persists, please feel free to send me more information
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