It's an issue with your Network.
Go to MS website & search for the error
Or, start over & set-up your network over again.
I have that very same error appearing: "Generic Host Process for Win32 Services has encountered a problem and needs to close. We are sorry for the inconvenience".
It's strange... it appeared in 3 diferent computers, all with Windows Xp Sp2.
It's not a virus, or at least McAfee anti-virus doesn't find anything. It's not drivers, I haven't touch a perfect working Laptop and after a while of being connected to the net this error appears! Sometimes at the beginning sometimens after 15min or more!
If I do nothing and only drag the error window, all is well, but if I Hit CANCEL, the internet connection stops working!
It's not Scanner (not Installed) and it happened tothe Notebook that doesn't even have Printer connection. Only to the sabe USB modem SpeedTouch 330 and to the same internet provider.
(I disconected the USB Modem from one computer and conected to other).
One question is... my Internet service provider (here in Portugal) it's able to provoque this error?
Porto - PORTUGAL