Yea, I went ahead and reinstalled my windows vista home edition on a vmware to see if this would affect that as well, which it did. Even the VMWare Vista install hangs at the welcome screen and the only thing installed on there is Vista Plus all windows updates.
You installed this version of Vista + CIS on a VM and that also is affected ?
What's your version of Vista HE you are running then ? Is it a OEM disk ?