System preparation tool 3.14 fatal error

I am on a Toshiba Portege z835 p372. I had to recover Windows 7 because it wouldn't boot. In doing so, as it began setting up for the first time, I received an error from the system preparation tool 3.14. It says that
"C:\windows\system32\VSSAPI.DLL is either not designed to run on Windows or it contains an error. Try installing the program again using the original installation media or contact the software vendor for support." 
When I click "OK", I get a window that says "A fatal error occurred while trying to sysprep the machine."

Hi,
How do you recovery Windows 7? I assume that you use some sort of OEM recovery tool.
And in recovery process, it uses sysprep tool to recovery. From your error information, the root cause is system file corruption.
In this situation, Windows fails to boot, I doubt if you can boot into Safe Mode or system recovery console, anyway, you can access the menu by turning on your computer and pressing the F8 key before Windows starts.
Advanced startup options (including safe mode)
http://windows.microsoft.com/en-in/windows/advanced-startup-options-including-safe-mode#1TC=windows-7
if you cannot boot into this repair console either, please use an Windows 7 installation media to boot into WinRE, and run SFC command to repair corrupted system file.
At the command prompt, type the following command, and then press ENTER:
sfc /scannow
Use the System File Checker tool to repair missing or corrupted system files
http://support.microsoft.com/kb/929833
Alex Zhao
TechNet Community Support

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