This article is originally from the Tritech Computer Solutions page called Windows Vista and 7 Update Reboot Loop Fix.
Symptom: You have an update that is causing Windows Vista or Windows 7 to get stuck in an infinite reboot loop. The problem usually manifests as a “Stage 3 of 3: 0% complete…” followed by a reboot which boots to the same exact message, not allowing you to get to your account login or desktop at all. It’s a pain and it doesn’t stop, even in Safe Mode or trying Last Known Good Configuration at the advanced boot menu.
Here’s the short version for people who know how to get to the tools to do this and if running System Restore from the install DVD fails to work: DELETE the files \Windows\WinSxS\cleanup.xml AND (if present) \Windows\WinSxS\pending.xml and the infinite update reboot loop will be fixed.
There are two ways to get to the files you need to delete. The easiest way is to boot your Windows installation DVD, and at the “Install Now” button, click the link at the bottom-left that says “Repair your computer,” open a command prompt, and type:
The other way is to download a live Linux distribution such as the Tritech Service System (which, unlike Vista or 7’s DVD, can be booted from a USB flash drive for computers with no CD/DVD drive such as netbooks), open a command prompt, mount the filesystem, and remove the files. Assuming your Windows installation is the first partition on the first hard drive, the following commands in rxvt or in a console in the Tritech Service System should work:
mount.ntfs-3g /dev/sda1 /mnt/sda1
rm /mnt/sda1/Windows/*/cleanup.xml /mnt/sda1/Windows/*/pending.xml
Either way you get it done, this solution will stop the update engine’s reboot loop and let you get back into your computer. You may have to do some additional fixes or manual updates if you encounter problems, but at least your login screen and/or desktop should be accessible! It’s a very annoying problem and I’ve noticed that Google searches for things like “vista stage 3 of 3 reboot” generally only provide info about how to run System Restore from a Vista DVD. Unfortunately, if there’s a problem with an update, sometimes System Restore does not work and fails with obscure errors, so this info is vital.
It may be your last chance to avoid giving up and reinstalling Windows, and we always like avoiding reinstalls!