"agreed, but surely that would be what the update is called? Not 'Office 2007'"
The compatibility pack installs some office 2007 shared components besides the filters, and they upgrade as office 2007 components, as well as the expected upgrades
"Unfortunately we (I) do not know which OS we are looking at - can you tell from the 'restore jpg"
that error message talks about volume shadow services not working, so its Vista or Win7
You'll probably find the system restore will work correctly if its run from the "repair my computer" option of the F8 startup menu, rather than from within windows
The VSS error usually indicates corrupt system files - booting from the F8 menu loads up WindowsPE instead of Windows, and won't be corrupted