Jthomson - your suggestion worked for me, however it seems to have caused another problem which I can't nail down. I followed your steps, putting only {Version} in the Label Format field and was able to create a Word document which displays the correct SharePoint-assigned version whenever it is opened. The problem is that, somehow, the association of the Word doc with SharePoint is being lost. My Doc Lib forces check out and versioning, and when I first save a document with the Version being dynamically displayed, and then close the document, I am prompted to check it back in. Then, I'm able to check it out and back in one more time without a problem. But the next time I check it out, when I close the file, it just closes - I am not prompted to check it back in, and SharePoint no longer recognizes the file on my local machine (in the SharePoint Drafts folder where SharePoint put it) as the file in question. When I go to SharePoint to open the file again (which is still checked out because it didn't prompt me to check it back in), I get this message in Word:
A copy of this file is checked out on another machine. The server copy may not contain your latest changes. Would you like to discard your check out before opening the server copy?
Any suggestions would be appreciated.
Thanks.