There was a known bug of a specific version of the 2008 VC++ runtimes that corrupted the MSVCR80.DLL file that came with the 2005 version so, possibly you have got this problem, due to another product (even not Flight sim related) that installed those runtime.
Try to remove all the instances of the Visual C++ *2008* runtimes instead, if you have any.
Then reinstall all the 2005 ones, then download the current VC++ 2008 ones from Microsoft site, and then do Windows Update again to be sure nothing is left to update.