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Windows 7 SP1 installation flaw [theregister.co.uk]
"We're hard at work here trying to see what's happening on these particular failures ... I don't have an answer yet, but as soon as I know something, you'll know it. Please keep me informed on any failures and symptoms you have on these machines."
MicroSoft is pointing its customers to this KB article [support.microsoft.com] (Your computer may freeze or restart to a black screen that has a "0xc0000034" error message after you install Windows 7 Service Pack 1 or a Windows Vista service pack) which offers a work around to fix the "C00000034" issue:
