It may seem weird, but I once got around the problem by initiating the system restore
as normal (in Windows XP) and as it rebooted pressed f8 and went into safemode.
Thus, system restore finished up in safemode and it completed OK. Once system restore
was complete (and successful), I rebooted to normal mode.

It seemed as if something during the startup (avast related) was interfering, rather than
something that was running when restore was initiated.