A family of Microsoft word processing software products for creating web, email, and print documents.
Try opening the Word document in application safe mode and check if you are able to update the cross reference. To do this,
Click on start>run> type Word /safe and click OK.
Note: There is a space between Word and '/'.
If it works in application safe, then try the steps given in the below:
http://support.microsoft.com/kb/9215
You may also restart the computer in clean boot and perform a test.
Refer the article below to start the computer in clean boot:
http://support.microsoft.com/kb/929135
Note: Ensure to restart the computer in normal mode by following Step 7, after completing the troubleshooting steps.
You may also post the event log for the issue, so that we could assist you better.
Check the steps give in the below article to get the event log.