I don't think it's a repairable problem. More likely it's a bug in Windows or WMP.
On my system it happens occasionally under these conditions:
(1) Play a MP4 video
(2) Close WMP and *quickly* double-click on another MP4 video file
(3) WMP doesn't start for about 60 sec and no video will launch
(4) After 60 sec, the "server execution failed" message happens
(5) Following that the 2nd video can be double-clicked and will launch OK
I cannot reproduce it at will, so the bug may be a software race condition which only happens under narrow situations.
If you get the error every time (not just infrequently) the cause may be different.