This error can be caused by many things: http://answers.microsoft.com/en-us/windows/forum/windows_7-pictures/error-the-application-has-failed-to-start-because/df019c0d-746e-42d0-ad68-465e18e3f3ef.

Did you install the latest SP1 version of Visual++ 2008 runtime redistributable? Note the OS is looking for the redistributable, not all of Visual++ 2008.