WIA hung on starting

I recently had a problem where (on WinXP embedded) I needed to make a WIA device work.

As soon as we plugged the device, it appeared in Device Manager but never appeared in My Computer.

Eventually, I found out that the Windows Image Acquisition service would be stuck in status Starting... I waited a while (I was debugging other driver issues) but the service was completely hung.

I used SysInternals ProcessMonitor (on XP embedded, you need the Filter Manager component for it to work) to try to see what was happening. You don't get a lot of information, but one of the last actions is that the service tries to open "c:\Windows\Sti_trace.log" and results in Access Denied.

I changed the account for the Windows Image Aquisition service from Local Service to Local System and everything started working!

I checked the permissions and User accounts (Local Service) cannot write to the c:\Windows folder, so the service doesn't start because it can't write its debug log file...

I don't understand how come I only get this error on XP embedded though as it seems this would happen all the time. I'll keep on investigating.

I've spent a day finding this, hope it can save someone some time!