I officially gave up with my fingers crossed that this would be a easy fix from MS.
So, I had an exact spare new HD and it installed everything plus all the updates without
any problems.
So, It's not hardware for me. It had to be corruption. :(
I plan on installing the org win7 HD as a slave and move all my settings and docs over to
the new hd.
Thanks everybody for some helpful hints on what it could be but they didn't work for me.
Good luck and take care