I am sure there is a simple answer to this one.
I have a docx file that I get an error when trying to download(document cannot be found).... .doc is fine .txt is also fine. I am sure this is just an iis setting, the permissions on the server are all the same for all files.
Yes, it's just an IIS setting: by default, it will only serve files for which the extension matches a defined MIME type.
To allow .docx files to be downloaded, follow the steps from the KB article linked above:
Note that the KB article uses the generic application/octet-stream MIME type: although that generally should work, if a more specific MIME type exists, such as application/msword, it's always best to use that.