That last fix seems to have done something to my logon settings. I have to use the Classic Logon to log in now, whereas I could just click the user on the Welcome screen before. Tried using TweakUI to Logon automatically but this gets reset after the first attempt to login.
Go to Control Panel > User Accounts > Change the way users log on or off
Put a check to "Use Welcome Screen"
Apply
That should do it..proceed with installing SP2