I just resolved this problem for a client, and thought I'd go back and post the info on the threads I ran across looking.
It's probably an issue with anti-virus software, usually Symantic products, being corrupted. Fully remove the software using the windows installer clean-up tool and symantic software removal tool if you have symantic products.
You can test to see that this is the problem by booting in safemode with networking. If it works in safemode this is probably the problem, if it doesn't it's probably something else.
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