I had a somewhat analogous situation last week...so I booted into my XP dual-boot install just to see if it was a Win 7 problem or a system problem.
My CMOS battery needed changing, problem gone.
Can you boot into safe mode? If so, I would try disabling auto update and see if it boots properly.
There is known documentation concerning this particular error message, http://support.microsoft.com/kb/949358
. I find this interesting because I did not have to follow any of those actions in order to restore my system to good working order.