I had a Windows 2008 server, that, after it had been restarted to apply the monthly Windows updates was hanging at the ‘Applying Windows Updates 3 of 3’ just before you would expect the log in screen.
Running in safe mode worked so I knew that this wasn’t necessarily hardware related. I removed all the latest Windows Updates one by one but this made no difference. Next, I went about stopping services and rebooting until I narrowed down the offending service.
In the end it was a combination of two settings:
1. I stopped the HP Network Config Utility program starting at startup using MSCONFIG
2. I changed a registry key as described in the knowledge base article:
http://support.microsoft.com/kb/2004121 Computer hangs at Applying Computer Settings or All Automatic Services Will Not Start After Reboot on Windows Server 2008
Rebooted and all seemed to be working.