Hi, JamesCollins.26
Welcome to the Microsoft Community. Thank you for sharing your issue. I understand that you are experiencing a correction issue in Word.
Regarding your question, your understanding of merging formats is actually correct. Merging formats means: 'This option changes the formatting so that it matches the text that surrounds it.'
Additionally, I tested your issue on a test machine, but unfortunately, I was unable to reproduce your problem.
You can try the following steps:
Exit all Office programs.
Ensure there are no files in the following folders:
Navigate to C:\Users\YourUsername\AppData\Roaming\Microsoft\Word\STARTUP, press Enter, and check if there are any files. If there are, please delete them. If not, close the window.
Navigate to C:\Program Files\Microsoft Office\root\Office16\STARTUP or C:\Program Files(x86)\Microsoft Office\root\Office16\STARTUP, check if there are any files. If there are, please delete them. If not, close the window.
Press the Windows key + R, type regedit, and press Enter.
Navigate to the following keys and rename the Word folder (right-click it, select Rename, for example, rename Word to WordOld):
HKEY_CURRENT_USER\Software\Microsoft\Office\16.0\Word
HKEY_CURRENT_USER\Software\Microsoft\Office\Word
Click Start, type %AppData%\Microsoft\Templates in the search programs and files box, and press Enter.
Back up and delete files with the .dotm extension, such as Normal.dotm.
After completing the above steps, check if the issue persists
Disclaimer: Generally, modifying registry subkeys or work group is intended for advanced users, administrators, and IT Professionals. It can help fix some problems, however, serious problems might occur if you modify the registry incorrectly. Therefore, make sure that you follow these steps carefully. For further protection, back up the registry before you modify it. Then, you can restore the registry if a problem occurs. For more information about how to back up and restore the registry, click
http://support.microsoft.com/en-us/topic/how-to-back-up-and-restore-the-registry-in-windows-855140ad-e318-2a13-2829-d428a2ab0692 to view the article.
Regarding your second question: On the test machine I used, when typing 'helllo', the AutoCorrect feature does indeed capitalize the first letter, changing 'h' to 'H'. However, after adding the '' symbol, AutoCorrect does not take effect. I noticed that on your old computer, AutoCorrect worked as expected. This could be due to design changes in the new version. Newer versions of Office may temporarily suspend or remove some features from older versions, which might be reintroduced in future updates. We apologize for any inconvenience this may cause.
For your third question, you need to go to 'File' > 'Options' > 'Proofing' > 'AutoCorrect Options' and ensure that 'Replace straight quotes with smart quotes' is checked

I hope the information I have provided has been helpful to you, please understand that our initial response may not always resolve your issue immediately. However, with the help and more detailed information you subsequently provide, we can work together to find a solution. Thank you for your patience and understanding, and I look forward to hearing from you!
Allen L- MSFT | Microsoft Community Support Specialist