Finally, I've found a resolution, 2 months after first installing:
- Install SP2 as usual up until it reboots and you are left with no desktop
and only a background
- CTRL+ALT+DEL>New Task >"regedit">
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Servic es\RpcSs>
Set ObjectName's value to "LocalSystem"
I discovered this in a support article about uninstalling SP2, it's at the
bottom.
http://support.microsoft.com/default.aspx?scid=kb;[LN];875350
Hopefully this will help the dozens of other users that have visited the
newsgroups having the same problem.