Transaction support within the specified resource manager is not started or was shut down due to an error

Manually clearing all the files from the following directory fixed the problem

C:\Windows\System32\config\TxR

I also reset the resource manager through fsutil before restart (not sure it was required or not)

fsutil resource setautoreset true c:\

These links were also helpful:

http://support.microsoft.com/kb/2484025 (The link is about fixing windows search service but that occur because of the same problem )

http://channel9.msdn.com/Forums/TechOff/WindowsUpdate-problem

Although I didn't try, but, its possible that the problem occurred because of some stuck NTFS Transaction, so probably you can also try cancelling all the zombie transactions using fsutil

http://technet.microsoft.com/en-us/library/ff621563(WS.10).aspx

First list the transactions using

fsutil transaction list

and then roolback any thing suspicious using

fsutil transaction rollback <GUID>