The Microsoft Word spelling checker seems to operate by straight
dictionary lookup.  If a word is in the dictionary, it doesn't get
flagged during a spelling check; if it isn't in the dictionary, it
does get flagged.  Is there anything more to the Word spelling checker
than that?  Is there some algorithm, for example, for how it ranks
suggestions for words it doesn't recognize?  Also, anything you can
tell me about the history of the Microsoft Word spelling checker--for
example, if it's improved at all over the years--would help.   Thanks.

You may want to check out the following US Patents related to
Microsoft's spell checker.  They should provide you with many
technical details, especially 6131102 for determining how it ranks
suggestions for words it does not recognize.

5649222 
5787451 
6085206 
6131102

Hi  lefty11,

Larkas-ga is correct, here is the link which should give you lots to chew on.

Method and system for cost computation of spelling suggestions and
automatic replacement
United States Patent 6131102
http://www.freepatentsonline.com/6131102.html?highlight=6131102

For a general history -
http://en.wikipedia.org/wiki/Spell_checker

Regards,
hummer