I'd like to add another possible cause of this error: when I built by MSI for application I added the CRT merge module, but forgot to add the police merge file for it.
After way too much time spent looking for a reason for why Windows couldn't find the CRT DLL I rebuilt the MSI with the policy merge added and my blood pressure could return to normal. Phew.
Not sure if VS adds the policy file by default, but the MSI builder I use sure didn't.
BINGBINGBING! We have a winner! I'm grateful I stayed with this thread long enough to see this post. As evidenced by the length of this thread, one can chase a lot of dead ends before finding this key fix. Thanks for the insight, Mikael.