Arc, followed the directions on using Resource Hacker and Windows 7 file replacer which did alter the shell32.dll.mui but did not resolve the problem.
I restored then took ownership and permissions of the pertaining folders and files. Using Resource Hacker, I removed "MENUITEM "Create &shortcut", 28688, MFT_STRING, MFS_ENABLED", backspaced once to eliminate the blank line then complied script. Xd out of everything and rebooted. Using Resource Hacker, I verified that the above line was gone and it is.
LANGUAGE LANG_ENGLISH, SUBLANG_ENGLISH_US
POPUP "", 32768, MFT_STRING, MFS_ENABLED, 0
MENUITEM "&Delete", 28689, MFT_STRING, MFS_ENABLED
MENUITEM "Rena&me", 28690, MFT_STRING, MFS_ENABLED
MENUITEM "P&roperties", 28691, MFT_STRING, MFS_ENABLED
However, the "create shortcut" is still present in the context menu so this did not resolve my issue.