I am narrowing in on the problem...
and its a real *****! So far, attempting to boot to Safe Mode or any other option on the F8 boot menu has no effect. The initialization error occurs before even safe mode is reached, so it becomes an endless loop of splash screen, reboot, splash screen, reboot, rinse and repeat.
The only solution that has yet worked for me is reloading the operating system from the install CD. Fortunately I have built all my systems from scratch with genuine M$ install CDs, not the big OEM house restore disks. Thus, I can use the repair option in the first screen of the retail install and not lose have the routine reset the partition to the original factory load. I am currently on my third reload of the evening and it is 1:30 in the freakin' morning so I am not a happy camper and I am not likely to finish troubleshooting this tonight, but here is what I know so far.
When the OS is reloaded from the original CD (a 40 minute process that looks exactly like a virgin install, but actually just overwrites the Windoze system files without blowing off the registry or any programs or data) TURN OFF Automatic Updates!!!! You may go to the Windoze Updates site manually and let it search for updates, but use the "Custom Install" not the "Express Install." This will allow you select the specific patches to be installed. When I started working on this issue earlier tonight and determined what was happening, I began installing the updates one at a time to find the one that caused the failure. I got halfway through the list of 16 and then got lazy. I did 4 at once and everything was fine. Then I did the last 4 on the list and bang, I'm dead again.
DO NOT INSTALL UPDATE NUMBERS 890859, 891781, 893066, or 893086. It is one of these that killed me. I do not yet know which one. Stay tuned and maybe I'll have some time on Sunday (won't have any time tomorrow, sorry) or one of you can take over the detective work.
Now if I were to rename my computer as "Kenny," then I could truthfully say, "Those ********, they killed Kenny." 
dw
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