[Valmont]

Don't do this "part" method. Use a simple global game loop. Also observe the usage of std::random_shuffle. Makes your life quite easy. After you've seen the code things are easy for you to do implement the rest:

#include <fstream>
#include <iostream>
#include <ctime>
#include <cstdlib>
#include <string>
#include <algorithm>

unsigned choose_word(unsigned);
unsigned calculate_lines(std::ifstream&);
std::string fetch_word(std::ifstream&, unsigned);

int main()
{
  using std::endl;
  using std::cout;
  using std::cin;
  
  std::string sWord;
  std::string sGuess = "quit";
  unsigned nLines(0);
 
  std::ifstream dictionary("dictionary.txt");

  if (!dictionary)
  {
    std::cout << "ERROR: There was error opening the file dictionary.txt." << std::endl; 
    std::cout<< "Please read readme.txt for possible solutions." << std::endl;
    std::cout<< "Terminating program...";
    exit(1);
  }
  
  while(1)
  {
    cout << "1 = Play Game" << endl;
    cout << "2 = Quit App" << endl;
    char appRun;
    cin >> appRun;
    if(appRun == '2')
    {
      break;
    }
    if(appRun == '1')
    {
      //Let's first determine how many words there are.
      nLines = calculate_lines(dictionary);
      //We know how many words there are, so let's choose a random word line.
      unsigned RandomLine;
      RandomLine = choose_word(nLines);
      //We know which line to pick. So let's retreive the word on that line.
      sWord = fetch_word(dictionary, RandomLine);
      std::random_shuffle(sWord.begin(), sWord.end());
    }
    else
    {
      cout << endl << "ERROR: you didn't enter \"1\" or \"2\" " << endl;
      cout << "Please try again." << endl << endl;
    }    
  }

  return 0;
}

//---------------------------------------------------

//So how many lines (=words) has this file?
unsigned calculate_lines(std::ifstream& dict)
{
  unsigned lns(0);
  std::string sBuffer;
  while( std::getline(dict, sBuffer) )
  {
    ++lns;
  }
  
  //Did something went wrong during the read of this stream?
  if(!dict.eof())
  {
    //Yep, something went wront. Ring the alarms!
    std::cout<<"ERROR: something go wrong during file reading.";
    dict.close();
    std::cout<<"exiting app...";
  }  

  //Do not forget to reset the state of the dictionary file object since it is
  //in a error state due to EOF.
  dict.clear();
  //And let the file pointer point to the beginning as it was before all this.
  dict.seekg(0, std::ios::beg);
  return lns;
}

//---------------------------------------------------

unsigned choose_word(unsigned maxnum)
{
  unsigned randnum;
  std::srand(std::time(0));
  randnum= std::rand() % maxnum + 1;  
  return randnum;
}

//----------------------------------------------------

std::string fetch_word(std::ifstream& dict, unsigned line)
{
  std::string buffer;
  while( std::getline(dict, buffer) && line != 1)
  {
    --line;
  }
  
  //Do not forget to reset the state of the dictionary file object since it is
  //in a error state due to EOF.
  dict.clear();
  //And let the file pointer point to the beginning as it was before all this.
  dict.seekg(0, std::ios::beg);
  
  return buffer;
}

Soo... what do you think?