I have the same symptoms as LDMartin1959, but the cause is slightly different and may be worth bearing in mind for others with this issue.
In my /Library/Preference/com.apple.timemachine.plist:
The SkipSystemFiles key is and as far as I know always has been <false/>
My issue was caused by the ExcludeByPath key. Looking back at the com.apple.timemachine.plist files that are in my TM backups:
1. After a clean install of ML, there is no ExcludeByPath key, but there is:
<key>IncludeByPath</key>
<array>
<string>/Applications</string>
<string>/Library</string>
<string>/System</string>
<string>/bin</string>
<string>/private</string>
<string>/sbin</string>
<string>/usr</string>
</array>
2. Some later (after install of Microsoft Silverlight perhaps?) the IncludeByPath key is still there but there is a new key:
<key>ExcludeByPath</key>
<array>
<string>/Library/Application Support/Microsoft/PlayReady</string>
</array>
TM continues to work well. The PlayReady directory is emply on my Mac - I assume because I have not downloaded any DRMed Silverlight media.
3. Two days ago TM stopped the backup of 'system' files, because:
a) the IncludeByPath key is no longer in the plist, and
b) ExcludeByPath is now:
<key>ExcludeByPath</key>
<array>
<string>/Library/Application Support/Microsoft/PlayReady</string>
<string>/Applications</string>
<string>/Library</string>
<string>/System</string>
<string>/bin</string>
<string>/private</string>
<string>/sbin</string>
<string>/usr</string>
</array>
So not surprising that there is no backup of system files!
What has made this change? I have no idea! I don't have any evidence that is directly due to Silverlight. My suspicion is that some application is directly modifying the plist (no doubt for good reasons), but is doing it wrongly! Or is TM doing it wrongly (it does rewrite the plist at every backup)?
Simplest solution is probably to delete the whole plist, let TM recreate it and reenter my own exclusions.
I will try and set up some monitoring of changes to the plist.