System Restore will not restore to any point where a machine configuration is faulty. That said, you may have better luck attempting System Restore from Safe Mode.
It is possible but highly unlikely your recent update from Windows was the cause either.
You can only restore a Registry if you have one saved via backup. A program like Erunt can be a life saver in such a situation. keep this link for future use, when you are more confident.
Did you try reregistering the MSI installer?
Start your computer in Safe mode, and then register the Msiexec.exe file. To do this, follow these steps:
Shut down your computer, and then restart your computer.
Restart your computer and press the F8 key on your keyboard. On a computer that is configured for booting to multiple operating systems, press the F8 key when you see the Boot menu.
Use the ARROW keys to select Safe Mode, and then press ENTER.
If the Boot menu appears again, and the words "Safe Mode" appear in blue at the bottom, select the installation that you want to start, and then press ENTER.
Log on to the computer.
Click Start, click Run, type msiexec /regserver in the Open box, and then click OK.
Shut down your computer, and then restart your computer normally.
For Windows XP, either reapply the latest service pack or repair the operating system as you cannot reinstall the MSI Installer, according to the article above.
Run the System File Checker program from the Run Box by typing.....Sfc /Scannow in it and have your XP CD handy.
If they don't work you could try repairing windows by running it over itself. You will lose all your windows updates but your files will be untouched.
How to Perform an In-Place Upgrade (Reinstallation) of Windows XP (Q315341)