See Reporting Problems for the two things we need to help.

We also need the exact Word version and the citation style you're using.

When I insert citations using the plug-in they are sometimes appearing with underline, which is really strange.

The underline is normal — that's just because you disabled "Automatically update citations".

Does it work in a new document? If so, see Troubleshooting Errors in Word Processor Documents for your existing document. It sounds like you tried some of that, but as the last step explains, unless you can clear the document completely and still reproduce the problem, that step will by definition identify or fix the problem.

The "Troubleshooting Errors in Word Processor Documents" page isn't relevant at all if it doesn't work in a new document, as it says at the top.

To be clear, I'm asking about a new, completely empty document, not a copy of your existing document.

Does it work in a completely new document? If not, what if you select an author-date citation style (e.g., APA 7)?

Have you used the Word plugin on this computer before? If so, what happened on your computer since the last time it worked?

There was recently a similar freeze due to a bug in Word for Mac when using footnotes, but we haven't received other reports from Windows, and that bug was fixed.

You can try 1) disabling any other add-ins/templates you have installed, 2) resetting Normal.dotm, 2) 3einstalling Word, or 3) 4reating a new OS user account to see if there's something in this account that's interfering, though that last one is a bit more annoying to do.

If all else fails, you could use an author-date style for now and just plan to change styles on another computer or in a later Word version before you need to submit your document.