I've been continuing my experimentation with this problem and have found that this process works fine on 32bit Windows 7. I only have the problem with 64bit.
Continuing in this problem I have repeated the process on a coworker laptop that is also using 64bit. His machine worked just fine. Now at least I have something I can compare against to hopefully solve my own problem.
Last night I was able to work my way through device manager and compare the two 64bit machines. There were some minor differences. There was the offical HP bluetooth driver on the non working along with Daemon Tools. And one other that I can't remember at this moment. Anyway matching all the drivers hasn't solved the problem.
Some people think using windows with out a mouse is hard... try using it with out a picture on the screen. It's very odd the system still works. You can press ctrl-alt-del and type your password. It will process your logon and all of your programs will load. All the sounds play and you will show up on IM networks that you have configured to autostart.
I'm starting to think I just have to rebuild onto a new computer.
I've run out of time to resolve this problem and will just have to blame it on some unknown driver or piece of software that i've used over the time I've had Windows 7.
I've reformated and started reinstalling all my software and settings.