I beat myself against this for six hours straight.
The reported symptom was that no new USB devices would install. During troubleshooting SFC /scannow yielded "Windows Resource Protection could not start the repair service." I received the following error message when I tried to start the Windows Modules Installer service (TrustedInstaller): "System Error 126: The specific module could not be found". The Installed Updates in Add/Remove Programs was blank.
I Googled this until my fingers bled. http://support.microsoft.com/kb/959077 seemed like it should help, but it didn't.
Finally, desperate, I called Microsoft. They said someone would call me back within 4 hours. Oh well... So I tried another desperate move: I copied the "c:\windows\servicing\trustedinstaller.exe" and the four "c:\windows\winsxs\amd64_microsoft-windows-servicingstack…" folders from a known working system to a CD then replaced the files on the affected system with those copied files after taking ownership from trustedinstaller and giving the administrator full control of the required files and folders in the affected system.