This copy of Windows must be activated before you can log on.

In this example: Your activation period has expired, (past 30 days) and you need to get to Normal mode again.

1. Turn On your PC

2. Press F8 repeatedly and go to Safe Mode (no Networking)

3. Logon as per normal 
(note: Administrator password is usually blank, but hopefully you know your password)

4. Allow the Desktop to fully load (answering "Yes" to continue into Safe Mode)
(note: This is just a long way of saying go to Safe Mode)

5. Click on Start - Run

6. Type in exactly: rundll32.exe syssetup,SetupOobeBnk (and click OK)
(note: one space, after "rundll32.exe " also the Oo are two letter o's in "oobe"; capitals and comma are important)

7. Wait a couple of seconds (although you will Not see any change)

8. Restart your PC normally (Start - Shutdown - Restart - Ok)

9. You are now able to go to Normal Mode again (For another 30 days !!!)

10. Install IE8, do not pass go do not install ie7, install ie8. that should solve not being able to run windows update and not being able to activate somehow it's tied to the broken ie. Let me know if this works. Now do whatever you like, you're back to Normal.

This fixed it for me but took me a long time to find this and get it going, hopefully it works for you to. 
(if you can simply get into safe mode and you have an installer for ie8 you can omit the activation reset as this will fix oobe)