The general expectation that, in principle, time-dependent density functional theory (TDDFT) be an exact formulation of the time-evolution of an interacting N-electron system is critically reexamined. It is demonstrated that the previous TDDFT foundation, resting on three theorems by Runge and Gross (RG) [Phys.Rev.Lett.52, 997(1984)], is invalid because undefined phase factors corrupt the RG action integral functionals. Our finding confirms much of a previous analysis by van Leeuwen [Int. J.

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... . Phys. B15, 1969(2001)]. To analyze the RG theorems and other aspects of TDDFT, an utmost simplification of the KS theory is introduced, in which the density is obtained from a single KS equation for one spatial (spin-less) particle. This radical KS formulation allows us to analyze also the concept of KS-type equations derived without a variational principle. We argue that such an approach can reproduce, but not predict the time-development of the exact density of the interacting N-electron system. Besides the issue of the formal exactness of TDDFT, it is shown that both the static and time-dependent KS linear response equations neglect the particle-particle (p-p) and hole-hole (h-h) matrix elements of the perturbing operator. For a local (multiplicative) operator this does not lead to a loss of information due to a remarkable general property of local operators. Accordingly, no logical inconsistency arises here, because DFT requires external potentials to be local.