To me it looks like this is the same problem as described in MDL-3014 : "HTML editor concatenates every 10th word".
I have just tried to reproduce it and it still is a problem in Moodle 1.9.4+ (Build: 20090204), when using Firefox. IE is fine:
When posting formatted text from Word 2003 into the HTML Editor in Firefox 3 and then pressing the clean Word HTML button produces a post that contains a load of word style garbage (<!-- /* Style Definitions */ p.MsoNormal, ...) followed by the correctly formatted text. However, some words are concatenated seemingly at random (every 7 to 13th space is missing).
Doing the same thing in IE6 doe not produce the garbage style information and does not eat spaces. Instead, the text is formatted as expected.
I can confirm this on Moodle version 1.9 also. Replicated on Mac OS X/Linux Firefox 2.0.0.9