Reason I suggested first checking in C:\WINDOWS\ServicePackFiles\i386 folder was:   I don’t have XP Home so then did a Google search on Application Management Event ID 7023 errors Interestingly most were for XP Home OS   Quote “I searched and saw MS noted this as a known issue for pre Service Pack 2….”   You didn’t say what MS KB it was, but I have just read MS KB 328213 Not sure if that’s what you were referring to?   Some interesting info:   1. Application Management service is not supported in XP Home 2. Appmgmt.dll file is not included with XP Home 3. Problem is caused by the registry setting that disables this service   Noted the dll file mentioned is appmgmt.dll & NOT appmgmts.dll ????   I assume the hotfix mentioned is to correct the registry setting, but would have thought that fix would have been included in SP3?   Some Google searches related to need to register appmgmts.dll file but then problems with XP Home not having Group Policy Editor (only available in XP Pro) etc.. etc..   So there’s your problem – have you tried to change Startup type to Disabled then see if any errors??  
I am getting several Event ID 7023 error messages ("The Application Management Service terminated with the following error: The specified module could not be found.") in the Event Viewer when I use Add / Remove programs in the control panel. I can literally force the message to appear by going in to Add Remove Programs and trying to add software from a disk (any install disk), even if I never make it to the point of installing anything. There are no noticeable issues other than the error message. I searched and saw MS noted this as a known issue for pre Service Pack 2, but I have Service Pack 3. Just to be sure, I got the MS Hotfix, but it would not run, saying I had a newer version of Windows than those known to be affected. At least one computer (Latitude D630 - happening on two of them here) has been running fine other than this message since June of this year without showing any other problems. I noticed it while setting up another D630 with WinXP Home today. That got me to inspect the other to see if it is happening there as well (same computer and OS), and it is. I understand it is probably inconsequential, but still, it bothers me. Any easy fixes, or should I just live with it, knowing that everything is working?
Event ID 7023 - Win XP SP3