So you never know if the book is fiction, historical fiction,
literally true to the last letter, or what?
You seem to be conflating the concept of Scripture being "the word of God" with Scripture being a particular genre.
Let's take one example: The book of Job is part of a genre of literature known as wisdom literature, and is therefore in the same literary genre as the Proverbs and Ecclesiastes, as well as the Deuterocanonical books of Sirach and Wisdom of Solomon. Job is not a historical text, but the text is set in an historical period (the time of the patriarchs, before Moses, before the Exodus, etc); and the text wrestles with complex questions about the struggle of man in the world and how the "righteous man" responds to turmoil. What makes Job interesting isn't that there was an historical person named Job, but rather the interplay between Job, his friends, and God, and the situation in which Job has found himself.
Job is "fiction", in the sense that the people and events being spoken of aren't historical individuals who experienced these things in actual history. Though I think calling Job "fiction" is also kind of lazy--as I said, Job is wisdom literature. The point of the text isn't its literary characters themselves, but rather giving voice to diverse ideas, exploring and wrestling with difficult concepts that we could possibly identify as ancient Hebrew philosophy.
Esther is another example of a non-historical work that explores diverse themes. In fact Esther is probably an example of an ancient Jewish comedy, and its significance is in the way the work talks about its characters and their situations. Esther is also an interesting book because it exists in two forms, the older Aramaic form which is still found in Jewish and Protestant Bibles, and a later Greek redaction that adds extra material to make the work a more serious, somber one which was found in the ancient Septuagint and, therefore, is the one accepted in Catholic and Orthodox Bibles.
The book of Daniel is an example of early Jewish apocalyptic literature, interweaving stories about Daniel, a refugee from Judea held captive in Babylon; who serves as a visionary that talks about not only the end of Exile but also invokes God's promises of freedom in the midst of the Jewish struggle against the Seleucids during the Hellenistic/Maccabean period. The work was most likely written during the Maccabean period.
All of these are Scripture, they are held as sacred, divinely inspired, and good and useful for the Church.
That there was no historical Job or Esther doesn't rob either text of their meaning; the quasi-historicity of Daniel is likewise unproblematic.
Both Jews and Christians, historically, have not been "fundamentalist" in their view of the Bible--allowing these texts to have a lot of room to say what they're saying, and allowing us as readers to wrestle with these these texts and how they continue to inform and have meaning in the lives of the people who believe in the God about whom these texts talk about.
Specifically in Christianity, we believe that God's Revelation isn't a book, or collection of books, but a flesh-and-blood human being: Jesus of Nazareth, whom we believe and confess to be the Messiah (Christ), the only-begotten Son of God, and the Incarnate Word of God: God in the flesh.
The Bible is, therefore, in Christianity, about Jesus. The Christian approach to the Bible is that the Bible is about Jesus. That sounds like an overly simplistic statement, but in actuality means a very deep contemplation and reading of the Bible as a larger, complex narrative of God meeting the world and God intending to rescue the world. The Bible, in its history, in its stories, in its myths, in its poetry, in its prophecy, in its myriad of expression is, ultimately, we believe by faith, directing everything back to what happened in those four Gospels of Matthew, Mark, Luke, and John; and there understanding not just what God did in Jesus two thousand years ago, but what that means today and also what it means for the future of the universe.
-CryptoLutheran