It does happen in each and every document.
It does happen even in a newly created document from scratch.
It doesn't happen when I use the same document in online Word, in the browser.
So something mysterious is happening with the app itself, locally that is preventing me to select text.
I have just created a text box now, to see if I can use Three finger drag or mouse buttons to move around the text box over the word page.
Upon creating the text box, using three fingers, it doesn't create it initially, unless I release the trackpad, making it look like it was already created and then remaining the 'adjusting size' things locked, like I would keep holding the trackpad touched when I don't.
After I created the textbox, I am able to move the textbox normally using three finger drag or the mouse button. I still, cannot select the text written inside the textbox.
Maybe it helps.