Any Word .doc or .docx files will look crossed out and should not be used: convert them to .txt first.
Text files within .zip files can be used; they will be coloured red in the Files available display but WordSmith can read them and get the texts you select within them.
Why not .PDF files?
Don't choose .pdfs either, they have a very special format. Essentially a PDF is a set of instructions telling a printer or browser where to place coloured dots. The plain text is usually hard to extract even if you use Adobe Acrobat (and Adobe invented the format).
Why not .DOC files?
A .DOC is rather unsuitable even if it does contain the text: this is what a .DOC containing only the word hello looks like in Word, then opened up in Notepad, then the .PDF of the same.
Check the format is OK
In the file-choose window you can test the format of the texts you've chosen with the Test File Format () button.