I've created a Content Link web part and want it to automatically update when a linked document is changed. In edit web part, there is a space "To link to a text file, type a URL". I've typed the URL to a Word document located on the same SharePoint site. Should this document be in a different format, as the result is many lines of inconprehensible code. Any help would be appreciated.
Are you referring to Content Editor Web Part (CEWP)? I see there is a codeplex project called Content Link web part, but it is similar to CEWP.
In either case, what you are linking to is a text file not a word document. Specifically this is used for HTML markup to be displayed on the webpart. You can try and save your word file as an HTML page, it may work correctly, but if you have complicated formatting and images, there will be more work required to get the content to show the way you expect in the CEWP.