I’ll make the (overdue) part two relatively simple. Please note that it is based on my experiences in 2008. Some things might change. Link to part one is here.
I have done both. Microsoft Word for writing my Bachelor thesis and LaTeX for my Master thesis. I learned that both has its better and worse features and neither is superior in all aspects. It all depends on your needs.
I’m going to post my experiences using Microsoft Word 2007 and LaTeX under Windows XP in several parts. Here comes part 1, which is about the installation and document structures.