The actually workaround before this hotfix came out, was is to uninstall the 974571 hotfix on computers before running USMT task sequence. This workaround works fine but was not sufficient for many customers (The opposite would have been funny ). Consider the following scenario: You install the System Center Configuration Manager 2007 Service Pack 1 (SP1) client or the System Center Configuration Manager 2007 Service Pack 2 (SP2) client. You install security update 974571 on this computer. A SCCM...(read more)

Read the complete post at http://scug.be/blogs/sccm/archive/2010/02/03/sccm-hotfix-available-kb977203-user-state-migration-fails-on-a-sccm-2007-sp1-or-sp2-client-after-you-install-security-update-974571.aspx