Goggles:
I'm a Vista Business user experiencing the Code 10 error. I've done the "big gun" fix and added LOCAL SYSTEM to my Administrator group, and it still hasn't solved the problem! I went back and examined my Process Monitor log after connecting the device, as you began to describe on the bottom of page 24, and there are NO results of "Access Denied." But the Code 10 error persists in the Device Manager.
The weird thing is, after a fresh install of the software the Zune seems to sync up. The software says there's a required firmware update, from 1.0 (193) to 2.3 (1145), but when I hit "install," about 30% or so into the download the driver cuts out and the Code 10 error pops back into existence. From thenceforth the software never again recognizes the Zune until I un/reinstall.
So, out of curiosity I ran the Process Monitor under the parameters/filters you laid out during this process (that is, a fresh install > connect Zune > Zune syncs > start update > Code 10 error reappears). That log doesn't have any "Access Denied" results either, but there might be something in there you can use. Just tell me what to look for.
In retrospect, the firmware updating process might not have anything to do with it... it might simply be a short time limit. When I left the device sitting on the screen requesting me to update, but didn't click the button, left, and came back to it, the Code 10 error had reappeared without me even starting the update process. So my Zune can sync for 60 seconds or so per install...
Help!