There is a problem with one of the Microsoft service packs that does cause the issue you are having.  My sister had that problem with her Compaq laptop after getting her automatic updates.  I called Microsoft support, read them the key on the bottom of the laptop (which they said didn't match her OS), read them the large key on the registration screen (which they said wasn't a valid key) and was then told to buy a new OS.  I found out from a friend who had the same problem, that it is a Microsoft problem and pointed me to a link on their website which described the problem and how to fix it.  Can't remember where it was now, as this happened a couple of months ago.

First choice is to have your retailer fix it for you.  If you end up going through Microsoft support, don't let them give you any crap about it. 

Al