With regard to to your question
Does the meaning of a sentence ever change between these two alternatives of ', which' and 'that' or is this just a style choice?
there is a famous instance from the 1984 Republican Party platform drafting debates that illustrates the significance that the choice between the two forms can have on sentence meaning. A draft of the taxation plank of that platform included a sentence that initially had this wording:
We therefore oppose any attempts to increase taxes which would harm the recovery and reverse the trend to restoring control of the economy to individual Americans.
Observers noted that if which were read as that—that is, as a restrictive clause—the effect would be that the platform opposed harmful tax increases but held out the possibility that certain tax increases might be harmless or even beneficial. (This was 1984, I hasten to reiterate, when such a reading of a Republican-authored document would have seemed not at all absurd.)
On the other hand, if which were read as the first word of a nonrestrictive clause, the wording "which would harm the recovery and reverse the trend to restoring control of the economy to individual Americans" would amount to a characterization of any tax increase.
According to Steven Hayward, The Age of Reagan: The Conservative Counterrevolution: 1980–1989 (2009), a congressman from Texas named Tom Loeffler noticed the ambiguity and insisted that the sentence be clarified by adding a comma before which, thereby confirming the nonrestrictive nature of the phrase "which would harm the recovery and reverse the trend to restoring control of the economy to individual Americans." Loeffler's effort succeeded, the comma was inserted, and the Republican Party began its tradition of explicit theoretical opposition to all tax increases.
With regard to your question
Is Word always correct in suggesting either a comma before 'which' or else using 'that'?
the notion that a word-processing program might be correct in trying to force users to make an either/or decision when a third legitimate choice (restrictive use of which) is available is, in my opinion, untenable. I have used that and which in their Word-approved ways for so long that I do it almost unconsciously—which (I hope) is fine. But many writers, both in the past and in the present, use which in place of that in certain situations, and I have no trouble understanding what they mean. I see no reason to let Word dictate correctness or acceptability in such a case.
For me as a reader, a problem arises only when (as in the Republican Party platform example above) a writer perhaps intentionally uses which ambiguously to avoid getting pinned down to a particular meaning. A comma is an easy thing for a reader (or writer) to miss, after all. But it seems to me that Word's effort to make writers choose between 'that' and ', which' may lead to more misstatements (from writers who mean one thing but haplessly choose the other under pressure from Word) than would have resulted if the program had simply butted out and let writers express themselves naturally.
Whether a relative clause is defining or non-defining (some writers say integrated or supplementary) is really more about semantics than punctuation. The first relative clause in the Original Poster's example is probably just an unconventionally punctuated non-defining relative clause. The clause neither explains which money it was that was given nor is an integral feature of the money that was given. Rather, it is a supplementary story about what happened to the money after it was given. (However, see further below)
The Original Poster's feelings about sentence (3) are actually the feelings that we should have about sentence (1). If this was actually a defining relative clause it might give us the uneasy impression that the money was already spent at the time of giving.
The rules for the omission of a relative pronoun can be summarised as follows:
- The clause will usually be a defining relative clause.
- The pronoun may not be the subject of the main clause in the relative clause (in technical terms it may not be the subject of the matrix clause in the RC).
- The relative pronoun may not be the complement of a preposition in a fronted prepositional phrase.
The second rule there means that it is not important whether the word is the object of the clause or not. The only thing that is important is that it isn't the subject of the main verb in the clause. To illustrate the point, the pronoun may well be the subject of a subordinate clause within the relative clause:
- That is the man [who] we suspect took the money.
In the relative clause above, who represents the subject of the subordinate clause:
The Original Poster's Questions
We can, of course, say (1). However, we would need a special reason to present the relative clause as a defining relative clause. We need some reason for which she spent immediately to be an integral part of the money. Here's a contrived example:
A: People never spend the money you give them immediately.
B: Rubbish! I gave Jane some money she spent immediately.
We could of course say money which she spent immediately and include the relative pronoun. This sentence does not quite have the same meaning as the Original Poster's number (3). The reason for this is that this sentence presents the fact that the money was spent immediately as an integral feature of the money for the purposes of the conversation.
Best Answer
tldr: What’s written is ok, and I’ll show you what it means.
Grammar is something that falls out of the spoken language, not the written one. Punctuation is unrelated to grammar except in that rare circumstance when it signals an audible intonation change meant to alert the listener to some change in the actual underlying grammar. Those cases are hard to come up with, but do exist. All punctuation is just cues for hearing the real language in your head better.
Therefore by that metric, not only is there nothing wrong with the punctuation as written, there cannot be, and no matter how it is written.
So try saying your first example aloud in your head, which I will here write without commas because voices have no commas, just intonation:
This is a restrictive that here, which you can tell because it can be substituted by which with no change in meaning or permissibility:
We can’t use that in descriptive clauses but we can use both that and which in restrictive ones, so if you can swap them, you know what you have. And the other way around, too. This is grammatical whether with or without its comma:
But this is ungrammatical again no matter whether you write the comma or not:
That one is wrong because it tried to use that for a descriptive clause, and you can only use which for those. The native ear goes HUH? when it hears it, which is what makes it ungrammatical.
As you see, it’s never its punctuation which makes something grammatical or ungrammatical. It’s whether you the right worms oops I mean words have managed to put together right — which this sentence almost did not. Twice. :) It had almost managed not to put the right words together, twice.
As you observe, we do not usually use commas before restrictive clauses in English because there is no intonation change to signal there. Presuming that the writer was a competent one, this means the writer was trying to signal something else by including intonation dips. I believe that what he was signalling was an apocopated version of two appositives, which I’ll use em dashes to set off with a repeated things:
If you read his punctuation there, the commas, as an indicator of appositives the same way as they’re used for that in this sentence, his pauses will make much more sense. It’s not especially common, so it’s no wonder it caught your eye, but I believe that there is a legitimate reading where it makes perfect sense.
As for this one:
Here you have to read this for syntactic constituents. The phrase if I’m not mistaken is a parenthetical aside. It could have been written:
So the commas are the same as parens or dashes: they’re there to surround the parenthetical statement. Since in the spoken language you cannot hear any punctuation, this cannot change the grammar. They’re just there to help the reader.
These too are all ok:
All those are fine. About the only thing you can’t do is say:
Because which cannot function there to start the clause to serve as the object of a preposition.
Summary
Don’t allow some simple, perhaps simplistic, mnemonic tip for good writing style such as “don’t use a comma before that” confuse you about the larger surrounding issues or about a sentence’s actual grammar. Such tips exist to break a common pattern in beginning writers unfamiliar with the conventions normally observed in these things. But rest assured that the actual grammar remains intact no matter the punctuation, for any grammatical error will jump out to your ear without seeing the punctuation — just like in my very last bulleted example sentence above, the one with the extra asterisk.