TOC, automatically update numbering & links?

Hi,

I've been using Word for a long time, and have never needed the
advanced features. I recently started working on a long document,
where I have a changing Table of Contents. I decided to see if Word
could make the updating the TOC easier.
I spent a lot of fruitless time trying to get the insert-field-TC
to actually do something, rather than just return to the cursor with
no error message, no anything. I was trying to do this because the
insert-indexes&tables-tables of contents would print the error text
"Error! No table of contents entries found" in the document where my
cursor was. I finally found a different way of making a TOC in the
help pages, by converting the text to type "heading." This worked,
but destroyed the formatting (which I fixed). Now the auto-numbering
of the numbered items no-longer works (even if I don't "fix" the
formatting). If I have 1,2,3,4 in the TOC and want to insert a new 2,
the existing 2,3,4 are not renumbered. This makes the whole exercise
useless. I was hoping that Word would save me the trouble of
constantly changing all the numbers in an evolving TOC. The TOC did
put in the right page numbers, and the update seems to work. I still
can't get insert-field-TC to do anything at all. (I am putting
"text" after the TOC in the window, and I tried adding switches...
The Show/Hide Paragraph mark doesn't indicate anything is there,
either.)
I also need the TOC to point to more than the page number - I want
the TOC number repeated where the actual document text is:
TOC
1. some stuff
2. more stuff
...
MAIN DOCUMENT
1. Some text about some stuff.
2. Some text about more stuff.
...

So the numbers need to be linked. So when I insert a new #2 in the
TOC, I automatically get:
TOC
1. some stuff (*press return here, or whatever
works)
2.
3. more stuff
...

1. Some text about some stuff.
2. (*this is automatically added)
3. Some text about more stuff. (*automatically renumbered)
...

So a new #2 is automatically added in the main document, and
everything below it is renumbered. (I will want to take out the copied
numbering in the main document when I'm all done, but I need it while
working on it to keep the different things organized.)

I was hoping Word would automate this. It appears the TOC was
designed to be added after you are all done - which doesn't help me at
all. I need the TOC to keep stuff organized while the document is in
development.

If Word won't do this, does someone know of software under $100
that will? I don't need other fancy word processing features.
If Word will do this, I would appreciate some pointers. (I didn't
fully research if it will do links, I saw something about that, but I
don't know if that's what it means, but if Word won't automatically
renumber the TOC when I insert a new entry, then I'm not bothering
with it at all, as I'd be doing it manually anyway - renumbering 25+
items so far - will be around 80.)

Thanks