Windows 7: Virtual Disk Service keeps hanging

Greatings.


First of all, while this subject is most definitely connected with virtualization, it is merely the first step to it. To top it all off, I can bypass this problem by using Safe Mode (read on for details), but I would really like to get this fixed. If I placed this thread in the wrong section, then I apologize sincerely, and I would be grateful if a kind moderator could move this elsewhere.


I'm having some issues with the Virtual Disk service in Windows 7. I'm attempting to do something quite simple, which is creating a VHS drive (NTFS formatted).
The creation procedure works fine if I try to create a FAT or FAT32 image, but hangs on the formatting stage if I try to create an NTFS image. If I use quick format, it will hang right then and there, if I don't use quick format, then the nice window will count from 0 to 100%, and then the whole thing will hang. The size or type of the created disk (dynamic / fixed size) has no effect, it would seem.


It's worth mentioning that the problem is clearly the Virtual Disk service; the Computer Management window remains responsive. However, because the VDS is all locked up, I can't even reboot (system will be shutting itself down endlessly and I need to cycle power).




I was able to get things working in Safe Mode, and for my current limited needs, this is a solution, however I see this as a symptom of potentially more serious problems in the system. Especially since the VDS locked up in other scenarios as well, such as changing a letter of a virtual disk (regardless if it is FAT formatted or NTFS, using Safe Mode, formatted).


Since the whole thing does work in Safe Mode (in safe mode with networking even), I started by disabling all possible services and startup items using MSCONFIG and running a diagnostics boot. The VDS was still unable to create a 10MB fixed-size NTFS formatted drive. I then tried disabling all possible devices in the Device Manager, but the procedure still failed.



At this point I'm out of ideas. What else can I do to fix this issue, and get the VDS to work properly?

Tell me, if you type cmd in search and in cmd type driverquery, do you see sptd as a driver?

No, SPTD driver (which is used by Deamon Tools, if memory servers), is not used. I use Virtual Clone Drive for my image mounting needs.

EDIT: The Virtual Clone Drive shouldn't interfere at all with the VDS, as I'm using both without a problem on a different system. Besides, I quickly checked, an removing Virtual Clone Drive didn't resolve the issue.