A friend of mine recently received an error message whenever he was trying to open iTunes. The error stated that the file scarddlg.dll was missing on the system and that a reinstallation of the application might fix the problem. A reinstall did not help and he asked me if I was able to come up with a solution to his problem.
A quick look on the Internet revealed that scarddlg.dll was related to the Windows Smart Card service. I asked him to load services.msc in the run box and search for that entry. It turned out that he had disabled the service. I asked him to enable it again and from then on iTunes loaded as usual again.
I also knew that a software called xp lite was offering a way to remove that service completely from Windows, I think it was in the Pro version of it. If that has been done the service would not appear at all in the services menu anymore. You need to use XP Lite to add that service again. Another option would be to install Windows XP again.
Update: Here is a detailed tutorial on checking whether the Windows Smart Card service is disabled or uninstalled on the system:
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