"We are sorry for the inconvience, but Windows did not start succsesfully, a recent hardware/software change may have caused this"
I was always afraid to installed SP2, and this is exactly why. Earlier today I decided to install all the windows updates, and get them going. I installed SP1, and all the other updates, when time came to install SP2. I installed and it told me I needed to restart, I did, and now i'm reciving that error message. I have tried many things, I tried safe mode and last known good config. I have even gone into the safe mode that loads only the windows domain drivers, which works. I can get into safe mode, and use my computer. But when I shut down, it gives me the same message. I'm not quite sure what to do, and any advice would be quite helpful. Thank you.

Have you tried removing the service pack from Safe Mode? Before you do that you might want to disconnect any external devices and see if it's just a compatibility issue with a SP2 and USB driver or something.

Uninstall any device drivers installed by sp2 .. and see if it starts normally ...

Or you can remove physically all the accessories like modem, lan etc ... and try starting windows..

Try disabling all programs, which auto start with Windows.