Big tip: If you are an iTunes user DO NOT RUN WINDOWS MEDIA CENTER. It will change permissions and make iTunes unusable if you allow it to access any of your media libraries.
Think of the children - don't do it!
Oh, and it broke synching with my iPhone - iTunes now says it doesn't have enough permissions to synch.
If you point WMC at your iTunes library it will try to reorganise things, and then iTunes will try to fix things, and if you backup your music you will backup both versions, and it all ends in tears.
So you decide to remove your iTunes music, photos and other media from WMC's libraries. Under Windows 7 this removes those folders from your Windows 7 libraries, and iTunes gives its unhelpful error message.
Once you've gone into services.msc and disabled all the Media Center services, go into your photos and music folders in the Start menu - you may find they're empty. Add in your actual folders (and optionally check permissions) and you're good to go in iTunes again.
Oh, and iTunes is such a bad application - it locks your PC while it tries to talk to your devices, it's slow...