KB916281 causing "Explorer.exe - Application Error"

After a hard drive failure, I did a full restore of the hard drive including
"System State". Now I experience "Explorer.exe - Application Error" during
boot-up when KB916281 is installed.
I have tried uninstalling all updates, then re-installing them, but the
result is the same. All works okay until KB916281 is installed.
I have also tried to "repair" IE using rundll32 setupwbv.dll,IE6Maintenance
"C\Program Files\Internet Explorer\Setup\SETUP.EXE" /g
Still I experience the "Explorer.exe - Application Error" when I re-install
KB916281.

Any suggestion what else I could try?