positioning of pictures

Hello
I am working on a Masters dissertation in Word 2007 in which I want to use
photographs and captions. Following advice on the boards, I have used Insert
Frame/ photo set to In line - and Insert Caption - which seems to be working
reasonably OK.

However, I am having problems positioning the pictures precisely where I
want them to go with the text. (I am coming from using Publisher for this
sort of thing - but Word is the preferred format for sending drafts to my
tutor so need to get to grips with it).

Basically -
1. How do I position the frame so that the photograph lines up with, say,
the first line of the paragraph? It seems to prefer to be a bit above or a
bit below.
2. If I put a photo/ frame into a paragraph how do I reduce the vertical
wrap so that I don't have large gaps - or a couple of lines of the preceding
paragraph wrapping as well?

I have uploaded a couple of pages to my website in case that helps. The
margins/ gutter are as I'll need them. I have left the header in in case
that's part of the problem (can't think why it should!) (Note - when I tested
the page I got a warning from Symantec but the page should be safe .... the
URL is http:​//www​.well​sprin​gs.or​g.uk/​photo​_posi​tion1​.docx.

Hoping someone can help - I'd rather not do two versions (as in the Word one
and the print-ready one in Publisher!)

Many thanks