More digging and found this on http://nothing.golddave.com/
1. While the installation is in it?s error state (in other words, while the error message is up) open up your services (Go to Start->Run, type Services.msc in the Open field and click OK).
2. Then open the defender service and change it from local account to an administrator account on your network.
3. Try to start the service. (It?ll probably give an ?access denied? error?.
4. Change it back to local account and it should work.
Problem is that when I use this machine at home I?m not on a network so I can?t log in as a network administrator. So I just changed the account. The account I use has admin rights but isn?t the admin. So I just changed to the admin of the machine, tried to start the service, got the error message then switched it back to the original account (with admin privileges) and it worked!
People have reported that you need to reapply these steps every time you reboot but I can?t vouch for that yet. I don?t shut down this computer very often opting instead to out it in Hibernate mote so I can boot it faster when I need it. But with the way I use this machine I?m bound to need a re-boot in the next few days so I?ll post an update when that happens.
Update: I have confirmed that the steps for remedying this situation outlined above must be repeated after every re-boot.