This google newsgroup tipped me off Google Newsgroup - Permissions

I'm testing it right now, but what looks like happened is the permissions on the local C drive were messed up. All that was in there was everyone with full control inherited all the way down. Of course that won't work as the local SYSTEM account needs access to certain areas of the C drive that it wasn't able to get to. Surprising though that only scripts were not working and everything else was fine.

Still not sure how the permissions got set that way, but it happened on more than one computer which makes me think it was more than just someone messing around.