I had this same exact problem. To solve it, go into:

Internet Options -> Browsing History -> Delete:

Make sure to check all options except the very first one (Preserve Favorite website data).

We were able to fix, then reproduce this issue by using CCleaner again, then fix again.

Go to this site for more information: http://grekai.wordpress.com/2013/02/24/localstorage-the-system-cannot-find-the-path-specified/