It sounds to me that your buddy has gotten ahold of either a badly modified/messed up pirate copy or an early build, as in pre beta/RC. My only suggestion is that in future, make sure you know the source of the software, if it didn't come from microsoft, it's probably not a good idea to install it.
Thank you folks.
Looks like I will back up my files and then revert back to VISTA. And I guess your right Radenight. I might as well try putting Windows 7 back in as a clean install and see what happens.
Are all the versions of Windows 7 going to expire and if they do, then what? If we do not purchase the Windows 7 we will have to revert back to Vista or XP?