I have found a solution to the above problem with a SQL server express 2008 install, it's a buggy windows update, KB2918614 and when other programs are installed (On one system there were a couple of instances of other versions of sql server)
Uninstalled the update and worked beautifully. This has been an issue for several other groups I know of and seems to have become more prevalent recently.
Our client's system was Vista, but I have found occurrences on 7 as well.