VB Flow Service throws exception with Developer 601 SP1

While we are trying to run the sample VB Service - wmVBdemo, we get the below exception
win32.COM.WmUnknownException: Invalid class string. Error Code=800401f3

Though the webmethods.dll has been registered, we still see this above exception. The problem looks to be related to SP1 of Developer 601. We donot see this exception if Developer is running without SP1.

Any ideas are welcome