Hi,
I had the same problem. Your solution probably works, but I was pretty sure I did not change anything to my installation. So I wondered why this file might have been gone astray. And then it hit me: I had been doing some cleaning up in my path settings. So I added C:\Program Files\Windows Live\Shared back to the system path, et voila...
You can find this setting in Control Panel > System and Security > System > Advanced System Settings > Environment Variables > System Variables > Path
Good Luck,
Weo