Which versions of Office will work with windows 8?

If you can't afford MS Office, give Libre Office or OpenOffice a try. Both are free and have good compatibility with MS Office file formats.

If you've got complex formatting or macros they might not work in OO or LO, but otherwise either of them would be a decent substitute. If nothing else they'd let you get by until you had the money for MS Office.

All versions since Office XP should.  I can confirm 2007, 2010, and 2013 myself.

https://www.microsoft.com/en-us/windows/compatibility/CompatCenter/ProductDetailsViewer?Type=Software&Name=Microsoft+Office+XP+Professional&Vendor=Microsoft&ModelOrVersion=10&Locale=1033&BreadcrumbPath=Microsoft+Office+XP+Professional&tempOsid=Windows%208

Is it possible (and legal) to download a free version of Office 2007?

No, its not, but you can download a trial of Office 2013 Professional Plus:

http://technet.microsoft.com/en-us/evalcenter/jj192782.aspx

You can also use Office online if you need strict Office compatibility:

https://office.live.com/

If the above options are not available to you, then you can look into free third party alternatives such as Libre Office:

http://www.libreoffice.org/download

All versions since Office XP should.  I can confirm 2007, 2010, and 2013 myself.

https://www.microsoft.com/en-us/windows/compatibility/CompatCenter/ProductDetailsViewer?Type=Software&Name=Microsoft+Office+XP+Professional&Vendor=Microsoft&ModelOrVersion=10&Locale=1033&BreadcrumbPath=Microsoft+Office+XP+Professional&tempOsid=Windows%208

Is it possible (and legal) to download a free version of Office 2007?