[1] MSE is able to update manually and complete a scan, however I have noticed Windows Defender service refuses to start, with seemingly no error in the event log.
[2] the computer [remains] behind a hardware and software firewall but was connected to the local network from first boot
[3] I also mentioned that I had managed to get Windows Search running, this turns out not to be the case, that service is still reporting the same errors as before
[4] This problem is likely due to faulty hardware. Please contact your hardware vendor for further assistance diagnosing the problem.
A1. MSE disables Defender by default; see http://blogs.msdn.com/b/securitytipstalk/archive/2010/08/26/microsoft-security-essentials-vs-windows-defender.aspx
A2. Is this "software firewall" the Windows Firewall or a third-party firewall? If the latter, what is the name of this application?
A3. Are any third-party toolbars and/or "system search" utilities (e.g., Google Desktop Search) installed? Are any third-party Windows themes installed?
[Clean boot troubleshooting technique might help you identify the troublemaker(s):http://support.microsoft.com/kb/929135]
A4. Have you looked into this "faulty [incompatible?] hardware" possibility? Was, e.g., WinXP or Vista originally installed on the computer-in-question and did you run the Win7 Upgrade Advisor before you installed Win7 Pro?
It's interesting that MSE is auto-updating & can be updated manually. (Technically, MSE updates via the Automatic/Windows Update "tunnel" but not via AU itself.) Speaking of which, is MS Office and/or Silverlight and/or any Windows Live Essentials applications
installed on this computer?
*[Note to self: Flip to WU?]*
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~Robear Dyer (PA Bear) ~ MS MVP (IE, Mail, Security, Windows & Update Services) since 2002 ~ Disclaimer: MS MVPs neither represent nor work for Microsoft