group policy client service failed non-domain laptop

Hi,
I have a laptop with all the latest updates installed. Legally licensed Windows 7 Home Premium 32bit ed. Running Avast anti virus.
Last thing I did was install a single windows update, I don't remember the update's number, but I remember the download size was less than 2Mb. I don't think the update has anything to do with this.. After successfully installing and rebooting, the laptop boots up normally and I get to the logon screen. After I enter my password I get the following error::

the group policy client service failed the logon access is denied

Most of the posts I've found online are for computers part of a domain. For independent machines, the common advice is to logon with another user, which I don't have. What I've tried so far ::

• boot to repair mode and create another user and add to users group via command prompt >> user still not showing on logon screen
• boot to repair mode and create another user with administrator rights via command prompt >> user still not showing on logon screen
• Boot to repair mode and scanning hard drive >> clean Repair startup 3 consecutive times >> same error message boot to safe mode >> same problem

Then I narrowed down the problem ::


boot to repair mode and run regedit. The registry key
has the value
Reboot, and still the same error message. I get back into repair mode and check the registry again, apparently the changes haven't been applied and svchost still running with the netsvcs parameter instead of GPSvcGroup


Any idea how to solve this?



Any help appreciated,
thanks