Earlier I upgraded a Vista installation to Windows 7 and faced the same problem myself, after trying several methods I finally managed to (re)install Daemon tools properly.
You should also try the following steps to solve the issue
1. Start->Run->type regedit
2. Navigate to the following key
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\sptd
Change the value “Start” (DWORD) to 4
3. Reboot the system.
4. Goto C:\Windows\System32\Drivers and delete(or rename) sptd.sys
5. Start->Run->type regedit
6. Navigate to the following key
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\services\sptd
7. Delete its sub folders and the sptd folder as well.
8. Reboot
9. Download and install the latest SPTD layer version from here:
http://www.duplexsecure.com/en/downloads10. Reboot
11. Install Daemon Tools 4.30. in compatibility mode if you get any install errors)
http://www.disc-tools.com/download/daemon