What is the solution if my Windows 7 is not booting after disc compression?

Vista/Windows 7 – Boot into the System Recovery Options using the preinstalled Advanced Boot Options or a Vista/Windows 7 installation/recovery DVD – see the illustrated tutorial at Sevenforums for instructions if required.

Select ‘Startup Repair’ and wait until the repair attempt completes. If successful you can then restart the computer and Windows may boot up normally. If the repairs fail and/or the computer does not restart into Windows normally, proceed as follows:

1. Boot into the System Recovery Options again but this time select ‘Command Prompt’ instead of Startup Repair – this will take you to a windows command prompt.

[Note: if using RAID for multiple hard drives you may not see your version of Windows listed in System Recovery Options, during the loading of the recovery process. In this case you would need to press 'Load Drivers' and browse to your RAID drivers so that your version of Windows can be listed]

2. Type bootrec /fixmbr and press Enter.
3. Type bootrec /fixboot and press Enter.
4. Type bootrec /rebuildbcd and press Enter. Type Y and press Enter if asked to add the installation to the boot list:


Bootrec commands

5. Type Exit and press Enter to restart the computer. The error message should not appear and Windows should start up normally.

If Previous Fixes Fail – This step should not be required but, if the previous fixes failed to resolve the problem, you may need to uncompress all files on the system partition manually.
•Log into the Recovery Console command prompt (XP) or the System Recovery Options \ Command Prompt (Vista/Windows 7)
•Type compact /u /a c:\*.* and press Enter. The command may take a long time (hours) to complete on a very large drive – leave until finished

Note: if your system drive is not c: then change the c in the command to your drive letter.

The command uncompresses (/u) all files (*.*) on the c:\ drive including hidden and system files (/a). Once the command finishes uncompressing all files, type Exit and press Enter to restart the computer. The error message should not appear and Windows should start up normally.

Conclusion

Unfortunately Windows does nothing to prevent an ‘optimizing’ program (or a user) from compressing the boot manager – even though it means that Windows will not boot. However, this problem is relatively straightforward to fix and easy to avoid in future – don’t use system optimizing utilities that may compress the system partition and don’t try to compress it manually.

http://techlogon.com/2012/05/07/how-to-fix-bootmgr-is-compressed-error-message/