We had this problem with VSE 8.8 (and I saw a few others in these forums with the same thing), and so we skipped 8.8 and went to 8.7i patch5 instead.
After installing VSE, the symptom for 8.7 is this:
User reboots PC. It boots up (Windows XP SP3 Pro) and presents the CTRL-ALT-DEL login.
You can move the mouse, but hitting CTRL-ALT-DEL yields nothing. Almost like keyboard is non-responsive.
If you bootup the PC with the LAN cable unplugged, then at the CTRL-ALT-DEL screen, plug cable in, and wait a few seconds, THEN you can login.
With VSE 8.8, neither keyboard or mouse works unless you unplug the LAN cable.
I know VSE 8.7/8.8 have some sort of network driver they use on the system, but I'm not able to reliably reproduce this on any given machine (ie, 2nd or 3rd reboot, the problem may go away, and it might not surface again for several days, on THAT machine).
Anyone else ever heard of this?
We have Dell Optiplex GX-620 and GX-745 desktops (primarily) although users with Dell Latitude laptops (610, 620, 630, etc.) are reporting the problems as well.
I see nothing obvious in the event viewer logs.