Step 1 is, as always, to shout "Screw you Word! The only sentence fragment I see here is in 'Fragment, consider revising'".
Sentence fragments are worth avoiding in some, but not all situations, but Word is really bad at identifying them. My guess would be that here it's because the imperative sentence "Type out..." doesn't have an explicit subject. Often a sentence without a subject (or several in different clauses) is a sentence fragment, but imperative clauses not only have an implied "you" but in present-day English we leave them out usually - sometimes adding it just for emphasis. That's just a guess, but it's the second-worse warning Word has for being either wrong or irrelevant.
The form "below code" is accepted by some dictionaries, but objected to by some people (I'm sure we have a question about it here, but can't find it). For that reason, while it's fine as it is you might consider "code below" or "following code".
A comma before the and would not be necessary but it would be allowed too, and it would give a pause within the sentence. Alternatively you could use a comma on either side of "or simple old Notepad" to make that a parenthetical remark.
The program Notepad is spelled Notepad not NotePad (unlike WordPad that is inter-capitalised).
Of these, number 3 is the only thing I'd consider a mistake. That and treating Word's messages as reliable. At most, maybe check those things it gives warnings for, but be aware that it very often not just wrong but very wrong and following its advice could lead you to turn perfect prose into clunky or even ungrammatical writing.