I believe that Office documents do get encrypted when you put a password on them as we had an Excel file at my office that no one remembered or knew the password to, and across my searches online in trying to figure out how to crack it, there were services and software for sale to decrypt the file or to attempt to extract the password out of it through what appeared to be brute force methods. If you really want the file to be secure I guess you could always password protect it in excel, zip it and password protect that archive, and then encrypt it using PGP or something. Depends on how sensitive this really is
Brute force programs work, but from my experience can take a while. There are some websites I know of that can decrypt for $10, per file and can show you a small preview to prove it can recover it.
For security, I guess I'd go with using a file container in True Crypt. (Whole drive encryption seems to be broken with Vista, at least the 64-bit version)