(A) "He always backs out at the time of need" - means he withdraws or fails to support when needed.
(B) "Their idea is still up in the air" - the idiom "up in the air" means uncertain or undecided.
(C) "The team worked round the clock to finish the project" - means they worked continuously, day and night.
(D) "She hit the nail on the head with her observation" - this idiom means to be exactly right or accurate.
Hence, Option 2: (A) - (III), (B) - (I), (C) - (IV), (D) - (II) -> Each phrase correctly completes its corresponding sentence with proper idiomatic usage: "backs out" for withdrawal behavior, "up in the air" for uncertainty, "round the clock" for continuous work, and "nail on the head" for accurate observation -> correct