I had the same issue, thanks to AI managed to fix it by following the following steps. It worked for me!
Step 1: Turn off AutoUpdate
Prevent Microsoft from automatically re-downloading the broken version. Turn off Microsoft AutoUpdate under System Settings > General > Login Items & Extensions (Allow in the Background), and uncheck automatic updates in the Office app's Help > Check for Updates menu. [1]
Step 2: Delete the Broken Apps
Open your Applications folder in Finder, move Microsoft Word, Excel, and PowerPoint to the Trash, and empty it (your personal documents remain safe). [1, 2]
Step 3: Run the License Removal Tool
To clear the corrupted activation cache, download and run Microsoft's official Mac License Removal Tool package. [1]
Step 4: Install the Working Build
Download the stable October 06 release (Version 16.113.4) from Microsoft's official Office for Mac Update History Catalog and run the installer. [1, 2]
Step 5: Launch and Activate
Open Word, sign in with your purchase-linked email address to validate the license, and restore editing privileges. [1, 2]