I don't use Works but if the settings are accessed similar to Word, it would be through a menu that opens when you click on a button in the upper left corner of the window. There is a button on that bottom of that menu called Options. If Works doesn't have such a button, this kind of thing would typically be on a Tools tab of a menu bar, under something like options, preferences, or customization.
That said, Works is not behaving properly. It should not be possible, through normal use, to associate the .doc extension with the .wps format (Works is actually saving as .wps but then attaching the wrong extension). Sounds like something became corrupted and the fix for that is probably not something you can do by selecting a default...