(1) You don't. Either remember the password, or the file/document is irretrievable. Even Microsoft says this about forgotten passwords: "[i]Microsoft has added password protection capability to many features in Office to help prevent unauthorized access to important information. If you are unable to access information because you do not know the correct password, please realize that: Microsoft support professionals cannot assist, under any circumstances, in the breaking of passwords applied to files and features within Microsoft programs.[/i]" And, before you even bother to ask, the members of TechRepublic have taken the same stance. Basically, IF you forget your password, you're out of luck.
(2) If the user has been created, you will be able to select that user when applying permissions. When that user logs into the computer under that username/password, they will be given access to edit the file. If the document is located on a network (either share or on a domain), Windows Authentication would take care of it. To explain it better, use the built in WORD help feature and search for 'password'. Under the topic of 'Allow editing in a protected document', you'll see the steps on how to set permission. There will also be other help topics displayed which can take you to a multitude of tutorials at the Microsoft web site.