It's a temporary file -- see http://support.microsoft.com/?kbid=211632 for a
description of the various types for Word.
No, you can't prevent them -- Office doesn't work at all without them.
If you see them on your desktop, then don't store documents on the desktop.
Store the documents in other folders and then you won't have to see them
(not that they won't be there).
If temporary files are left behind after you close all documents (including
shutting down Outlook), then see
Microsoft Word MVP FAQ: http://word.mvps.org
Email cannot be acknowledged; please post all follow-ups to the newsgroup so
all may benefit.