Solution:
I finally got my Connect ui back working! I ended up getting process monitor off of sysinternals.com and then running a connect install in vmware to track down every single action taken by the setup kit. It turns out the sony uninstaller leaves behind all of the config files which is why the reinstall didn't help. To fix I had to:
1) Add/Remove programs and uninstall the connect reader
2) delete the following folders:
C:\Documents and Settings\[UserName]\Local Settings\Application Data\Sony Corporation
C:\Documents and Settings\All Users\Application Data\kinoma
C:\Documents and Settings\All Users\Application Data\Marlin
3) And then in the in the registry delete:
HKEY_CURRENT_USER\Software\Sony Corporation
4) Reinstall the connect software
After all that the reader UI came back up and was working again. Of course I lost all of the collections i had defined and had to re-add all my books to the library (the person at sony that decided to not let you copy collections from the reader back to connect should be shot!) but after that its all back working.
Funny aside before doing this I called Sony support and was told simply to rerun setup. After that failed they informed me my operating system was broken and I should call Microsoft. Having worked at Microsoft for many years in a past life I knew there was zero chance that this was a corrupt XP install which is what made me go and figure this out. Hopefully it helps someone else!
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