Found a helpful post over at http://www.sevenforums.com/media-center/27995-wmp12-server-execution-failed.html. I tried Nkarytia's suggestion of taking ownership of the codec keys. I then uninstalled and reinstalled the k-lite codec pack. Almost all of my music then started working. Still got a few of the same "server" errors, but quickly discovered that they were now limited to just about 20 or so songs. I copied them over from my backup drive, and now they play as well. I had not tried copying backups over initially. I've seen a couple corrupt songs over the years, but not ALL of them, ALL at once. 500+ MP3 files on a brand new drive, that were working fine previously, just don't suddenly go bad....
It truly appears that one of Microsoft's recent "updates" to WMP caused MP3 file corruption. I've seen the library itself get corrupted (not since Beta though), but have not seen it affect the files. Is it possible that huge library that becomes corrupt can cause the files to corrupt?
I'll post back if I have any more difficulty, but for now it appears this may be resolved.