I write grant reports and such that have figures interspersed throughout body
text.  I am having trouble with arranging the figures appropriately.  I want
the figure to be located near a certain paragraph, but it doesn't have to be
exactly after it.  I also want to include a caption (formatted appropriately
so Word will be able to index it).  Finally, no body text should come up
along the sides of the picture.

If I format it to be "In line with text" then sometimes the picture moves to
the top of the next page, leaving behind a large white space on the previous
page, which is not acceptable.

If I format it to be "square", "tight" or one of the other options,  then
sometimes body text sneaks up the edges, particularly with smaller figures.  
Also, Word won't let me add a caption (right-click figure, select Caption) if
it is not "in line with text".

I also don't want to do a fixed alignment on the page, because then if I add
text, the figure will no longer be located near the appropriate part of the
text.

What is the best way for me to arrange figures appropriately?  

Thank you!

Heidi