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Windows 7 installed new updates, restarted the computer, now its stuck at the "Preparing to Configure Windows" screen.

The typical solution is to boot into safe mode and do a system restore, but for whatever reason, I have no restore points.

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The solution was to boot into safe mode, uninstall my antivirus (avast). Restarted into normal mode, and Windows booted. –  user14851 Apr 13 '12 at 17:06
    
I have had several W7 machines hang at that screen after updates, all I did was a hard reboot, then windows loaded normally without error, your AV may not have been the issue. –  Moab Apr 14 '12 at 23:50
    
@user14851: If you find a solution to your question, feel free to post it as an answer and accept it as the correct solution. I took the liberty of creating a community wiki answer in the meanwhile. –  Oliver Salzburg Jun 12 '12 at 18:59

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It seems like Avast AntiVirus can cause this behavior. user14851 notes:

The solution was to boot into safe mode, uninstall my antivirus (avast). Restarted into normal mode, and Windows booted.

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Since the problem was never the fault of avast!, uninstalling it was not the right thing to do since it left your system defenseless. A hard reboot would have cured the problem. Once you restart your computer, you can always go back to the Windows Update function to verify that all of the scheduled updates completed properly.

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