What is "Invalid Handle" and how can I fix it?

[mfaklis]

I volunteer at the State of California's Employment Development Department Experience Unlimited job club. A few weeks ago the state installed 15 identical HP AU1245AV workstations with a customized image. The bureaucracy, a bit better than DMV, doesn't give me access to the person who build the images. The images are of Windows 7 Enterprise without SP1 and Office 2010 Professional Plus. I wasn't given an admin id and password until two weeks ago. The 15 machines are in a Workgroup, because EDD won't let me put them into a domain, but that just adds to the burden of this problem.
I immediately noted that Windows Update was repeatedly installing and reverting the same 10 to 18 updates on each restart. That problem's solution is well documented and I've run into it before with XP.
The real problem is that any attempt to execute an *.exe or *.msi results in an error "Invalid Handle". The Win 7 and Office 2010 programs that came on the image rune fine, but I can't install any updates, including MacAfee updates. I can't create a trace log because the diagnostic programs are *.exe, which gives me an "Invalid Handle". The same problem occurs with Microsoft's Fix-It downloads and 3rd party registry repair programs.
I believe "Invalid Handle" is hinting towards a corrupted registry, but I'm unable to gather any evidence to back that up. I don't know if the "Invalid Handle" corruptions was a result of Windows Update getting corrupted. I never had that problem when Windows Update got corrupted in XP, not have I had that problem of any of my personal test machines. The problem may in-fact be in the state's image source, which to-date I don't have any access to. I build my own Hyper-V VM intended to match the state's image and I find many deletions of security groups and differences in the default user-rights in the local Security Policy.
If I had my way, I'd create a Small Business Server 2011, reimage the machines through PXE, and put them under the control of the server for maintenance. I've made that argument many times, but you know how people avoid technology they aren't familiar with.
Given what may be too much background information, can anyone shed some light on the "Invalid Handle" problem and how it might be repaired without using a *.exe file?

 

[soulstealer1984]

I personally have not run into this problem but this link may help, Invalid Handle while opening VSS(Run As administrator in win7).