Thanks for the helpful replies.
sfc from recovery doesn't help because both the target and the source file are corrupted. Whether from recovery partition or from DVD.
Repair wouldn't work because it kept saying "repair in progress waiting for reboot". The cbs.log indicates there are file renames and moves from a repair pending but not occurring.
I have the installation media because we buy that with all of our Dell hardware. But it is OEM.
The fix was in the mix here on 7forums. Thank all of you for the helpful links that eventually lead to goodness on other pages.
- I first uninstalled SP1.
- I then extracted the DLLs (system32 & winsxs) from the installation media using the 7-zip tool and a link from this forum.
- And lastly downloaded the SP1 repair disk and created a bootable USB as a just in case - but didn't use it. Helpful links though....
- I then booted into the recovery partition and at the cmd prompt copied the extracted DLLs to the respective system32 and winsxs folders.
- Then ran sfc verify and all files checked out okay
- The pending file rename/moves went away
- Then reapplied SP1
As soon as the SP1 completes

I'll re-verify.
This all started with back-to-back auto installs of SP1, .NET4 and IE9. I have now backed out all three and I'm fine. Fun.
Thanks.