I don't know where this myth began, but I have seen enough reference to it at this point that I think it's time to call it out directly. There is no such thing as a binary key that you need to unlock the Microsoft Office XML formats. They are just pure XML files that are fully documented (have been for awhile now). This isn't something where I'm asking you to just trust me; instead you can go and look for yourself. Take Office 2003 and save any Word document you have as XML. Now open that file up in a text editor and take a look. (If you don't have your own copy of Office 2003, try this free lab online that let's you play with the XML functionality).
I'm trying to figure out how this rumor was started, and I have a couple ideas, so let's try and track this down. Let's talk a bit about the format so that you can understand what's there. Take any XML file saved from Word 2003:
I wouldn't be surprised if the alleged "binary key" was just a byte order mark which caused problems when trying to process the XML file using non-Unicode savvy tools. I suspect some of the ODF folks who had problems with the XML file would get some use out of Sam Ruby's Just Use XML talk at this year's XML 2005 conference.
My theory is that the "binary key" idea came about because someone just took a quick look at file format without really doing their homework. For example, if you combine #2 and #3, you would probably see a binary blob in most files that appears to be at the top. The reason for that is that if the file has a image or some other kind of object in it, and since the file isn't pretty printed, the first line break would come from the base64 encoded data. That would mean that it would look like there is some binary data right at the top. The weird thing here though is that some of the folks that were saying there is a binary key supposedly spent a lot of time looking at all kinds of document formats and investigated them in order to create a universal file format capable of representing every document that ever existed. I would think they would have looked a little closer and seen that there really isn't a "binary key" to unlock the documents. They are already unlocked.
To learn more, go check out the documentation. It's up there for free and anyone can download it. Or play around with the free labs. Or read my "Intro to Word XML" posts. The easiest way for us to have good discussions on these topics is for everyone to actually look into it themselves rather than relying on random news stories. I understand not everyone has the time to look into it, but unfortunately there is a lot of false information out there.
-Brian