Did you have any luck fixing this? I'm having the exact same problem with my installation of WS08 R2, except it isn't a VM.
Happened in exactly the same way. Overnight an update must have applied itself and automatically rebooted, and ever since it has been in the same endless reboot loop. The server isn't backed up and has no data on it, but has software I really need that I don't have the installation key for, so I really need to boot into this system.
Am really interesed in any fixes that may work for this. When I try running SFC frrom the repair console I get the message:
"There is a system repair pending which requires reboot to complete. Restart Windows and run sfc again."
If I can remove this pending update I may be in business. Any ideas?