Running MSI files after SP 2 on WinXP

After installing SP 2 on Windows XP Pro my fellow support guys and myself have found that .msi files give the following error when we try to run them:
“The Windows Installer Service could not be accessed. This can occur if you are running Windows in safe mode, or if the Windows Installer is not correctly installed. Contact your support personnel for assistance.”

We’re not running in safe mode, nor is the Windows Installer service disabled. Ive found very little help on the MS site. Is ANYONE else having this problem? We have found the only solution is to uninstall SP2. It then begins to work again correctly. Thanks for any ideas!