Changing the Hanging Indent size may not work if it has not been set up in the style template. Check this in the Output Style - Bibliography - Layout - Hanging Indent - select All paragraphs.
In numbered styles - the space between the Bib no. and the Reference is determined by the tab settings in Word - adjust this to suit.
You can customise the format and look of your Bibliography or Reference List.
Change the font, add a heading for your Bibliography or Reference List, change the line spacing, or change the hanging indent for your references. This option is found by clicking on the arrow to the right of Bibliography on the middle panel of the Word ribbon - click on Layout tab.
A bibliography can be divided into categories with groups of references listed beneath each category heading - e.g. Primary Sources and Secondary Sources - this is done in the Word document.