To address your specific problem, natcolley, where exactly are you receiving the error and what is the error message? If that .doc file is showing up in the file manager (admin/store/products/files) then the module shouldn't be complaining about an invalid directory. The reason you see no SKU or product in the file table is that you must first add a product feature (by using node/*/edit/features) to a product before the file is associated with a product & SKU.