The part that stand out to me is services being stopped that were restarted. SONAR cannot use anything not recognized by Windows.
If you open "Change Sound Card Settings" (type that in the search field above the Windows Start button), with the Octa-Capture online, does Windows recognize the Octa-Capture? Win7 tries to take control of devices, so if it appears there, select "properties" and then "Advanced" on that next window. The two check boxes in the "Exclusive Mode" box may need to be unchecked (or vice versa). This also needs to be done on the "Recording" tab if is the issue.
From your posts it seems that Win7 is up to something. Another thing to try is open Windows Explorer and right click your C:\ drive, then select "Properties." On that pop-up window, choose the "Tools" tab at the top, and click "Check Now" under the "Error Checking" This will require a reboot (cannot be performed with Win7 actively running), and will force Win7 to "validate itself" on the next reboot (may take several minutes to perform).