Reinstall System Restore with these two steps:
First Step - Disable system restore & delete any old restore points.
Click Start, Programs, Accessories, System Tools, System Restore,
System Restore Settings, "System Restore" tab, and check the box. "Turn Off System Restore on
all drives", click "Apply" and "OK". When done, go back and enable it again.
Second Step - Reinstall System Restore:
1. Click Start, Run, In the Run box, type "C:\windows\inf" without the quotes and press enter.
2. Look for SR.INF and RightClick on it, then select "Install"
Follow the prompts, Reboot, and System Restore will be ready to use.
NOTE: If it asks for the Windows CD, point it to C:\WINDOWS\ServicePackFiles\i386
NOTE: If it asks for "srframe.mmf", point it to C:\WINDOWS\system32\dllcache