Do excised words count?

Definitely count them. They're all part of writing the story, even if they won't be in the final version. (And it's too soon to decide if there's nothing salvageable in them.) Highlight them. or use strikethrough, or whatever to mark them and keep going.

You can definitely count them if you keep them and like Sage said just mark them as unsavory. Anything to help that word count! Personally, I don't, because if I didn't like it enough to keep it in the first draft, it's probably best I forget they ever existed. That said, I'm usually only doing that for lines here and there. I save the real editing for later.

In his book No Plot? No Problem!, NaNo founder Chris Baty suggests highlighting unwanted words and changing the font color to white. They're still there and qualify for word count, but they're rendered invisible, easily found when you start editing. *Anything I don't want to use, from entire faulty passages that make no sense to incorrect word use, I push down to the bottom of the chapter file and flag between asterisks.* If it's on the page, it's fair game to be counted (typos don't count, though).

I push the sections that I plan on cutting to the bottom of my WIP. That way my draft is cleaner but I still keep track of the words I've written.

I will usually use strike through to handle deal with words or sections I hate with the force of a thousand suns I don't like.