The reason why images pasted from Xara into Word print funny (look fuzzy) is because they paste as OLE objects and Xara does not support a resolution of more than 96 ppi for these objects (Xara's limitation which should be addressed). What I do is export the figure from Xara as a png or jpg (depending on the figure) at a resolution of 200 to 300 ppi and then import it into Word. I'm guessing you know how to export images in Xara. To correctly import images into Word 2007 (quoting from a tutorial I am writing for some other organisation):

Figures can be inserted from the Insert tab of the Ribbon by clicking on Picture in the Illustrations group, or by revealing the Developer tab (Microsoft Office Button > Word Options > Show Developer tab in the Ribbon) and clicking the Picture Content Control button in the Controls group.

Yes, I'll produce videos on creating custom styles (subscribe to my YouTube page and you should automatically get an email when I add anything). They are very useful and not hard to make.