Nice quick solution. Its amazing what objects can do to your excel file. As a quick add on solution to above, when I followed the instructions:
File -> Options -> Advanced > Display options for this workbook: -> For objects, show -> All
the embedded objects weren't visually apparent, and I could not find any button or other object just by glancing at my sheet. Also, my workbook contains 10+ sheets and the data tables are many columsn and rows.
So to find if there were any objects in my workbook, I used a similar solution I read somewhere else (with regards to solving the problem with Excel size being very large). You need to search your work book and sheets using the Find & Select button in Excel 2007:
Find & Select -> Go To Special... -> Objects.
This brings you right to the object and highlights it. Hit delete on your keyboard (even if you can see the object). Run again, and on each sheet, until there are no objects found. You will get a pop up that there are no objects.
After this, to be safe, I did a Save As as well after all this.
Size went from 2MB to 650k, and copy and paste errors, along with some other weird activity are no more.
As for the cause, question 2, in my case, the objects appeared because I copied and pasted data from an Internet based software I was using. There must have been some hidden objects that got copied over. A solution to this, always paste copied data as text when copying from an external source. This way, you dont get any garbage along with the data.