The fact that removing the character formatting radically changed the layout in one case, suggests that there is some formatting overriding the style. If your printer prints fine with Word documents created on another computer, that indicates one line of investigation.

Have you tried repairing Word using the installation disc?

One way of stripping such mystery overlays is to save your document as an XML document, then save that one back to a .docx. I have not used this technique, but it's possible that it might clear things up -- again, assuming that the problem is in Word, not the printer.