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When you insert a picture in Word, it defines a series of "wrap points" around the picture. By default there are four wrap points that surround the perimeter of the picture, forming a rectangle. When you wrap text around the picture, the wrap points define how close the text can come to the picture.
If you want, you can create custom wrapping of text by editing the wrap points so they more closely reflect exactly what you want. Simply follow these steps if you are using a version of Word prior to Word 2007:
If you are using Word 2007, then the steps you follow are different:
Tip #1873 applies to Microsoft Word versions: 97 2000 2002 2003 2007
Add a Professional Finishing Touch! Word includes great tools that allow you to add professional-grade finishing touches to your documents. You can add indexes, tables of contents, and other special tables by using the detailed information available in this volume.