Repair:
Click Start, Search and look for SR.INF. It should be in "C:\WINDOWS\inf"
RightClick on it, then LeftClick it, select "Install"
Follow the prompts, Reboot and System Restore will be ready to use.
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Another possibility is that the System Restore folder is damaged.
Disable system restore, delete the System Restore folder, reboot,
then re-enable System Restore. The folder will be re-created
automatically.