Kernel 7.01 upgrade issue.

I'm installing EHP1 in our solution manager and I'm having a very weird problem while upgrading the kernel.

Our system is running on Windows 2003 32 bit and I have tried 3 kernels already and none of them seems to work.

basically the issue seems to be that the commands are not recognizable... for example if I run R3trans -d i get "The system cannot execute the specified program" in the event viewer i can see,

"Generate Activation Context failed for E:\usr\sap\<sid>\SYS\exe\uc\NTI386_701\R3trans.exe. Reference error message: The referenced assembly is not installed on your system."

Same happends with most executables...

The problem does not exits with 700 kernels.

Theres no issues with permission and I'm 100% sure I'm downloading the right kernel.... I wonder whats wrong?

Maybe I'm missing an OS SP or something....

Regards

Juan