I just wanted to jump in here to clarify a few things.
I've been chatting with Henry (hseiler) for the last few minutes. Suggesting a clean install of the OS is very serious business. If there are any behaviors in FastCGI (or any other part of IIS) that can lead to this, I want to make sure that we look into it.
What has happened here is that an internal component of the Windows setup engine (the component store that Henry mentioned) has somehow become corrupted. I've discusssed potential causes for this and he tells me that with the way the IIS component setup works, there is nothing we are doing that will lead to this. There is also no way a user could induce this situation by setting up something incorrectly. In the instances we know of where this problem has been seen, it has occurred randomly during install or uninstall of some component. The specific component does not matter.
Unfortunately, once the machine is in this state, the Windows installer is broken. It cannot add or remove any Windows components and it cannot apply updates to the system.
We have reason to believe that the OS repair that Henry describes may correct the problem, as it rewrites the component store. It should also preserve the configuration of the machine. Note that you will need to re-install any OS updates after doing this, since the nature of the repair is to restore OS files from your media.
Please let us know how the OS repair works for you. We are interested in confirming that this action corrects the problem (since we've never been able to get our hands on a machine in this state to try it for ourselves.)
Thanks,
-Wade