Hi, this could be a tricky one have you spoken to Faronics support? Maybe you could use the RE (boot from the OS dvd) and select "repair your computer" option, then open command prompt.
I would try the Dism util and see if you can clear any pending actions (this fixes the loop problem with windows updates) at the prompt:-
dism.exe /image:C:\ /cleanup-image /revertpendingactions
You might be able to disable deepfreeze at the same command prompt:-
type:- regedit (press enter) highlight the HKEY_LOCAL_MACHINE, key and from the "File" menu select load hive a sources window will open change to computer and to your OS disk (normally C:) then navigate to:-C:\Windows\System32\Config\system, a load hive box will open call it Deep_Freeze, navigate to this newly created key and browse into that new key\CurrentControlSet\Services\servicename and take note of the Start value, which can be 0-4:
0—Boot start: started by the operating system loader first.
1—System start: loaded during kernel startup after boot start drivers.
2—Auto start: Service Control Manager (SCM) starts these next.
3—Demand start: started on demand by the SCM.
4—Disabled: will not load.
Set the start type for the deep freeze service to 4, go back to the new key
Deep_Freeze highlight it and from the "File" menu select unload hive.Restart computer. You might like to look through this:-
How are Windows Updates handled on Deep Freeze protected computers? - Powered by Kayako Fusion Help Desk Software
BTW you have backed up haven't you?