To enable the Merge to e-mail option, try the following:

First, check that Internet Explorer|Tools|Internet Options|Programs (or the
equivalent in older versions of IE) has your e-mail package set up to be
your default e-mail client. It almost certainly is.

Assuming that isn't enough, you may be able to fix this by adding some lines
to the WIN.INI file, which should be in your Windows directory (typically
C:\Windows)

To try this, proceed with caution! Close all your programs (Word, your
e-mail package at least), and open the WIN.INI file with Notepad and ensure
the following lines are in there, or add them if they are not:

[Mail]
MAPI=1
CMC=1
CMCDLLNAME=mapi.dll
CMCDLLNAME32=mapi32.dll
MAPIX=1
MAPIXVER=1.0.0.1
OLEMessaging=1

(IN fact

[Mail]
MAPIX=1

should be enough, but the above lines are the ones you will typically find).

For Word 2003, MS has put these entries in the Registry where they have
belonged for years. The trouble is that I do not know what actually puts the
correct entries in there, and editing the registry can be dangerous unless
you know what you are doing.

But you need to ensure that the folowing Key is in your Registry:

\HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows Messaging Subsystem

You then need the following value (at least) within that key:

Name: MAPIX
Type: String Value (REG_SZ)
Value: 1

You may also need some of the other ones you may have in your WIN.INI, e.g.

Name: CMC
Type: String Value (REG_SZ)
Value: 1

Name: CMCDLLNAME
Type: String Value (REG_SZ)
Value: mapi.dll

Name: CMCDLLNAME32
Type: String Value (REG_SZ)
Value: mapi32.dll

Name: MAPI
Type: String Value (REG_SZ)
Value: 1

Name: MAPIXVER
Type: String Value (REG_SZ)
Value: 1.0.0.1

Name: Olemessaging
Type: String Value (REG_SZ)
Value: 1