BarahaIME in MS Word 2007

The "square boxes" problem of Word 2003 persists in Word 2007 as well. But if you select "Arial Unicode MS" font in the fonts dropdown box, Indian language text is shown instead of the "square boxes".

However, there is one more problem. "Arial Unicode MS" font doesn't have the proper glyphs to render the text in certain cases (such as the word "telugu" in the above picture). So, you may want to change the text to its default Indian language font for proper displaying. This is where Word 2007 handles Bengali and Malayalam text in a different way compared to Kannada, Hindi, Tamil, Telugu, Gujarati, and Punjabi text.

After typing Bengali text, Word allows you to change the font from "Arial Unicode MS" to Vrinda. Similarly, Word allows you to change the Malayalam text to Kartika font. But, Word doesn't allow you to change the font from "Arial Unicode MS" to the default fonts such as Tunga(Kannada), Mangal(Hindi), Latha(Tamil), Gautami(Telugu), Shruti(Gujarati), and Raavi(Gurumukhi).

It seems we will have to wait for a couple of more years for these type of issues to settle down!