Rather than running the system restore from inside windows try doing it from the vista install disk restart your pc, boot from the vista disk select your language and on the next screen select "repair my computer" and then choose system restore and it may work. You might want to try a startup repair also, but that probably won't do any good. You can check for system file errors by opening a command prompt (as an administrator) and typing sfc /scannow and yes there is a space after the c and before the /. If there are any corrupt files windows will attempt to repair them and if they can't be repaired it will tell you at the end of the scan and give you the path of the log file so you can see what couldn't be repaired. If you know what update caused the problem you could simply uninstall it by going to control panel>programs>uninstall a program then choosing "view installed updates" from the left pane and then find and uninstall it.
I hope this helps
