This could happen in a networked environment-perhaps two people have copies of the document and are essentially working on them at the same time. The second possibility in Kathryn's case is that the changes have truly been resolved, but that the document is being overwritten by an older version of the document. (Assuming, of course, that they haven't made the same change to their privacy settings.) Thus, if your document has hidden markup, sending the document to someone else will cause that markup to be visible when they open it on their system. It should probably go without saying, that while you can change the privacy options on your system, you can't change them on someone else's system.
With that understanding, if you go through a document and resolve all the changes, there should be no need to change the view to "Final" as the only reason to use that view is to temporarily hide changes. If all of the changes are resolved, then there should be no difference between the two views ("Final Showing Markup" and "Final") because there is no longer any markup to show. When you turn it on, any edits you make are noted in the document as "markup." This markup is supposed to be visible on the screen, provided you are viewing the document as "Final Showing Markup." You can either temporarily hide the markup (change the view to "Final"), or you can get rid of the markup by resolving the changes (accept or reject them). Here is the way that Track Changes is supposed to work in Word.
As a final step, she changes the view of the document to "Final" and saves it, but when the document is next opened, it has reverted to "Final Showing Markup"-and all the changes are back again. It seems that when a document has tracked changes, and those changes are eventually all accepted, they don't really go away. Kathryn is experiencing a problem related to Word's Track Changes feature.