Windows installer service could not be accessed windows update fault

Newsgroup ::: microsoft.public.windowsxp.general

"Windows installer service could not be accessed" - Windows Update fault?

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Having a bit of a problem with our network at the moment. Most of the
pc's on our network cannot install most apps at the moment giving the
error:

"Windows installer service could not be accessed. This can occur if
you are running in safe mode, or if the windows installer is not
correctly installed."

This even happens after a fresh install of xp! Any ideas? I've
started the installer service in computer management and the problem
remains.

The affected pc's cannot do a windows update in IE as you get the
message:

"Please change your Internet Explorer security settings
To save changes to your settings for this website, you need to enable
userdata persistence for Internet Explorer. Complete the steps
below,and then click Change settings to the left and try saving your
changes again.
In Internet Explorer, on the Tools menu, click Internet Options.
Click the Security tab, click the Internet security zone icon, and then
click Custom Level. In the Settings dialog box, scroll to the
Miscellaneous section. Under Userdata persistence , select Enable.
Click OK and when the security warning dialog box appears, click Yes.
Read more about steps you can take to resolve this problem (error
number 0x800A0046) yourself."

Following the steps, it makes no difference. The affected pc's also
cannot use word any more as their email editor as we get the error:

"Word is set to be your e-mail editor. However, Word is unavailable,
not installed, or is not the same version as Outlook."

I cannot reinstall office as you get the first error about the
installer service, and from what I've seen, reinstalling XP doesn't
make a difference either!

Has there recently been any windows updates that are causing this
problem?!

Any help would be great.

thanks!