In the new Google Drive there is no longer the option to have Google Drive ask you if you want to convert your Office documents to Google Docs. This option is now on or off. I had previously blogged on how to convert an Office document to Google Doc in the new Drive.
By default, when you drag or upload an Office document to Google Drive the Office document will not convert. It will remain as an Office document. Part of the reason for this is that the new Google Drive allows you to edit Office documents and leave them as Office files. The editing however is limited and you lose collaboration capabilities and automatic saving.
In the settings click on the check box to “Convert uploaded files to Google Docs editor format.” This will cause all of your Office uploads to automatically convert to Google Docs. If you do not want this to happen you will need to go back to the settings cog and uncheck the checkbox before you upload a file.
Gmail Add to Drive
In Gmail when you are sent an email attachment of an Office document you can hover over the attachment to have the option to download or “Save to Drive.” When you save to Drive you are able to choose the Drive folder you want to save the file into. REGARDLESS of your Drive settings, these Office Documents will NOT automatically convert. They will be saved in your Google Drive as an Office Document. You will need to manually convert from Office by opening the file in Google Drive and using the File menu to save as a Google Doc.