Here is a cautionary tale for anyone who may be experiencing a similar problem. I was fortunate to find the solution but only after a few hours of uninstalling, reinstalling, and various other black magic tricks.

Problem: I installed the latest Microsoft .NET 2.0 and 3.0 service packs from Windows Update and all instances of .NET stopped working.

Symptoms: The first sign of trouble was a failed install of the service packs through Windows Update. It was late at night so I didn’t think much of it and shut down the computer for the night. On the next reboot another odd thing happened, my ATI video card control center (which relies on .NET 2.0) did not start and showed an error box. Yet again I was in a hurry and didn’t think much of it. I have had problem in the past from ATI so I chalked it up to an ATI bug. I finally realized that my entire .NET installation was hosed when I opened up Visual Studio and got a rather nasty list of errors. I soon verified this by opening a known good .NET application without success.

Solution Attempts: I first tried to reinstall the update from Windows Update and got the same error message from earlier. I soon verified that all versions, 1.0, 1.1, 2.0, and 3.0, were messed up. I then uninstalled everything related to .NET and restarted. After the restart 2.0 and 3.0 installed fine but I got an error with 1.1. 1.1 died when trying to register System.EnterpriseServices.dll and produced a regsrv crash message. After a few Google searches I found a .NET developer blog by Aaron Stebner at http://blogs.msdn.com/astebner/archive/200.../08/510677.aspx. First I tried to disable the Microsoft Distributed Transaction Coordinator (MSDTC) service. Next I tried the custom .NET uninstaller; all without success.

Solution: Throughout the blog there is mention of DEP (Data Execution Protection) errors. Out of desperation I disabled DEP, restarted, and it worked perfectly. This is very surprising to me because Microsoft can not get its own software to play nicely with DEP.

Conclusion: Disable DEP before installing any .NET updates.

Does this mean that you must have it disabled only when installing new updates, or all the time when you are using .NET Frameworks?

Only when installing updates.