My computer is receiving faxes just fine. In fact, my boss has just sent through a three-page report from Toledo. I'm impressed by his faith that I can somehow magically put the fax into a Word document in time for the big meeting in 10 minutes, but I don't share that faith.
It can be awkward when the real world intrudes on a belief system.
Anyway, the brief answer to your problem is to ask your boss to resend the document in some other form, pronto. Any other method of transferring the text is preferable. If your boss can send you a fax, he can surely send the text as an attachment to a message from his Hotmail account, can't he? If an attachment is beyond him, have him lump the text into the body of an email message. Fixing the line breaks and stripping out Hotmail's ludicrous attempts at formatting will be preferable to retyping it.
Still, if you're stuck with a fax, you can try either of two tacks:
Try OCR on the fax. If it's not too grubby, you should be able to get most of the text. You'll need to check it and correct any errors, but that's better than retyping it. See the next Annoyance, "Scan and OCR a Document," for details.
If the fax is clean enough, or if you must use it as is in your document, insert each page as a graphic and crop off the transmission data at the top and bottom. The resolution will be low, and your mileage will vary, but it's worth a try. If you're going to print the document, you can use Word's cropping feature. If you're going to distribute it in electronic form and you don't want others to be able to see the cropped areas, use a graphics application to crop the fax before inserting it in the Word documengt.