I had exactly the same problem here is the solution that worked for me:
1. Re-register msxml3.dll. Click Start, Run, Copy and paste this:
2. Click OK. You receive a message indicating whether this step was successful.
Regsvr32% windir% \ system32 \ msxml3.dll
3. If it fails, go to the next step and if successful, reboot the pc. Reinstall MSXML3.
4. Click msxml3.msi at the bottom of the page and follow the wizard instructions to complete installation.
5. Restart the computer and log on to MSN Messenger.