How effective is a Time Machine backup? I'm having a problem with Office not installing correctly and not being able to update. I have one last resort which is Backing up and formatting my system.
However I would like to know how effective is Time Machine for the following two points :


Will I be able to restore "EVERY" application without the need of re-installing items ?? For example, I have python installed with many modules that take ages to get them all working together. Would I need to repeat this process after cleaning my machine and using the backup to restore ?
Office has been corrupted after deleting it. Now it fails to install correctly and update. What is the chance that the corruption would be copied over to the backup file, rendering the whole process of formatting my machine to "fix" the issue useless ?
Whoa, that's a way last resort. You don't have a computer problem, you have a Microsoft problem. Move all Microsoft preference files (plist and plist.lockfile) from both ~/Library/Prefences and ~/Library/Preferences/ByHost, and from /Library/Preferences, to the Trash. 

Any Ofice apps in Applications or the whole Microsoft Office folder, move to trash or zip and store in /Users/Shared. Same with Microsoft folder in /Library/Application Support. Start with a clean state. 

Log out, maybe even Restart, and try installing again. Sometimes just getting a fresh copy of  Microsoft AutoUpdate into /Libary/ApplicationSupport/Microsoft/MAU2.0/ gets it all working, along with letting the apps build fresh Preferences--let MAU find and install updates.