I wanted to start my Studio 2011 articles with this topic for two reasons: (1) This is an important enhancement of Studio for those who are stuck with clients who still require this old Trados file format, and (2) The process can be a bit confusing. Hopefully, the following information can make it easier and clearer.
1. Files need to be pre-segmented
It’s important to know that if you want to save your translation as a bilingual Workbench file (aka “uncleaned” Word file) in Studio, the file needs to be pre-segmented in Trados Workbench before you open it in Studio. To do this, select in Workbench Tools > Translate > Segment unknown sentences. For further details, see this SDL blog article.
Also, it’s better not to change the text colors in Workbench because that can create problems with target text formatting in Studio. For example, when you insert a bold tag to the target text, the tag can also include the color of the source text in addition to the actual bold formatting, i.e. your target text turns bold and blue if you had changed the source text color to blue in Workbench. To avoid this, select in Workbench Options > Translated Text Colours > Unchanged for source and target.
2. DOC or DOCX format
The pre-segmented file needs to be in either DOC or DOCX format. Studio doesn’t seem to accept RTF files. You get the “This file type is not supported” error message. If the original file is an RTF file, then just save the segmented file as DOC or DOCX.

3. Only monolingual files are supported – what’s up with that?
This might be the next stumbling block when you are trying to open the file for translation:

I find this error message very confusing. “This file cannot be processed because it was saved as a bilingual document in Word. Only monolingual files are supported”. Wait a minute… wasn’t the bilingual file support one of the new features of Studio 2011!? I think they could have easily made this error message more informative and less confusing.
Anyhow, if you get this error message when trying to open a segmented DOC or DOCX file, take a look at your file type settings for the file type in question (Tools > Options > File Types > Microsoft Word 2000-2003 / 2007-2010 > Common).

Make sure that the Process files with tw4winMark style option is NOT selected. By default, it shouldn’t be checked but sometimes you need to select it in order to be able to open files that have tw4winMark styles in them (even if the styles are not used in the document). Anyhow, that’s another topic (and source of error messages) altogether, and we’ll get back to that at some other time. So, now after unchecking the box, you should be able to open the file.
4. Getting rid of the source text in the target column
Since the file is pre-segmented, all the target fields are already filled in either with translations or with the source segment content, depending on the TM and the fuzzy match setting you used for the segmentation in Workbench. Having the target side filled in with source text can be annoying because fuzzy matches will not be automatically inserted to the already occupied target fields during your interactive translation and you would need to use the Apply Translation (Ctrl+T) command for every segment.
You can avoid this extra hassle by emptying the target fields before starting translation. The best way to do this depends on the fuzzy level you used in Workbench when you segmented the file. I think this works best if you use the 100% or higher match value setting during the segmentation step in Workbench.

This way it will be easy to clear all the source language text from the target side by using the Clear Draft Segments command (Translation > Clear Draft Segments). It will leave your 100% match translation untouched but clears all the other segments quickly in one go. If you want to clear the segments based on some other criteria, you can use the Display filter to display those segments, as needed, and then select the desired segments (click the number of the first one, keep Shift key down and click the number of the last one to be selected so that all the desired segments get highlighted) and use the Clear Target Segment command to clear the content (right-click menu or Translation > Clear Target Segment). If a large number of segments have been selected, this can take a while.
5. Use of TMs
For the segmentation in Workbench, you can use any TM you want to. Of course, if you have a client-provided or other project-specific Workbench TM, it’s probably the most practical one to use. You can also use the same TM during Studio translation. It’s really easy in Studio 2011 to include Workbench (and TMX, TXT and MDB) memories in a project because you don’t need to do the full TM upgrade process separately first. Studio 2011 allows you to run a Quick Upgrade as part of the TM selection process which makes it almost as easy to use these non-Studio TMs as it is to use actual Studio TMs. You can add non-Studio TMs in the Open File-based Translation Memory dialog box exactly the same way as Studio TMs, just make sure you have the right file type selected (see below).


6. Miscellaneous
Note that the Preview function does not work with Workbench files but you can view the target translation in Word using the File > View In > Bilingual Word Document as Target command.
And as an addition to the potential confusion, when you open a bilingual DOC file for translation, a DOCX file with the same name gets created in the same folder. Why? Good question.