Ubuntu host, XP Virtual - .Net installation

[HeadInTheClouds]

Firstly, thanks Sun for an excellent product, Virtualbox is fast, simple... just perfect!
Now to the question:
I have a Virtualbox running on Ubuntu 8.10 Ibex, Gnome.
Virtual machine is Windows XP pro, service pack 3 (converted from Microsoft to VMWare using VMWare on an XP environment).
I load the VMWare machine in Virtual box, all runs fine shares, network, internet etc.
The XP machine has .Net (all versions) installed.
Windows update attempts to update .Net 1.1 service pack. The update install and fails.
I manually download the update, and manually install, it appears to work, but also fails.

Also when I try running
Serena protoype composer, which worked in the Microsoft version, prior to conversion, the exe complains with the following message:
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PrototypeComposer.exe - Bad Image
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The application or DLL c:\WINDOWS\Microsoft.NET\Framework\v1.1.4322\mscorwks.dll is not a valid Windows image. Please check this against your installation diskette.
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OK
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The dll is present in the folder named, and as said before this worked fine in the Microsoft VM.

Anyone know how to fix this?
I was hoping to move my work in to Linux, and use a VM to continue the Windows dev, design and architecture work, that is my daily job.
thanks
HITC

[HeadInTheClouds]

It seems that the original MS VM has somehow become corrupted, which means the VMWare version - Virtual box version too fails.
The fault seems to lie in the .Net files / installation, as when I try and "repair" even .Net thinks the version is a different one.
Solution
1: is to either un-install then re-install all the .net packages, or
2: build a new machine
I chose 2 as if some files have failed, I have no idea how many other files too are broken.