The subject behavior will occur if the the VDS (Virtual Disk Service) is disabled.
To resolve this problem:
1. Open a CMD.EXE window.
2. Type the following command and press Enter:
REG ADD HKLM\SYSTEM\CurrentControlSet\Services\vds /V Start /T REG_DWORD /D 3 /F
3. You should receive:
The operation completed successfully.
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