Windows 7: W7U Cannot boot due to 0x80070002 error

Hi folks. Hope this is posted in the right place. Long time lurker but first problem which I require help with. I work from home and losing $$$ due to this error.

Critical updates were installed for my Windows 7 Ultimate 32-bit desktop yesterday, today I put the computer on and just after the Windows loading screen I receive a Bluescreen for a millisecond before computer immediately restarts. I am them prompted to do a repair when computer restarts which after many minutes brings up the error message 0x80070002. The computer is a self build and has been fine for 3 years but this appears to be a major problem. I cannot afford to lose my files (most are backed up but not all since I only back up every month to an external drive). From the repair screen, I have tried to restore the computer before critical updates were installed (what I feel is causing the problem) but the restore point fails. I cannot enter the desktop and now the startup repair simply hangs.

I really hope someone can help me with this as I'm at the end of my tether. Many thanks.

Go through the steps for Troubleshooting Windows 7 Failure to Boot and post back if you need help with those steps or if you are able to solve the problem with those.