Already done. System file checker reports no issues, chkdsk no problems, updates are fine. I don't want to run a repair installation because I am more interested in finding out what the problem actually is instead of just overwriting it. Something tells me that an entry has been added to somewhere in the registry that causes any file named setup.exe not to run.
I even tried opening the file (actually let me change that to avoid confusion, any file named setup.exe) while running RegMon with file system monitoring active. I actually never saw the setup.exe process show up. The only thing I can think of that causes this same sort of issue is when an antivirus program detects a file is infected, if you try to open the file you get the same error as if the file does not exist.
I may even open up Visual studio and try to launch setup.exe within a custom program, but I have a feeling the same thing will happen.
I know the answer is out there, I am willing to spend the time to find it.