This error indicates that Windows could not find the system volume. It comes as a nice blue screen of death (BSOD) with the following error description:

A problem has been detected and windows has been shut down to prevent damage
to your computer.
If this is the first time you've seen this stop error screen,
restart your computer. If this screen appears again,
follow these steps:
Check for viruses on your computer. Remove any new installed
hard drives controllers. Check your hard drive
to make sure it is properly configured and terminated.
Run CHKDSK/F to check for hard drive corruption,
and then restart your computer.

Technical information:
*** STOP: 0X0000007B (0X80786B58,0XC0000034,0X00000000,0X00000000)

It is often caused by

1. booting from a USB-attached disk
2. switching SATA mode from IDE to AHCi

There are also other causes, see Microsoft KB, About.com

How to install Windows onto an external USB hard disk or a USB jump drive: even if you manage to get Windows onto your drive, it won't boot and fail with the above error because it loads USB drivers too late.

Workarounds are available; be aware that a Windows update may restore the registry changes and your drive won't boot anymore.

I successfully used this method here: Boot Windows 7 from USB hard disk (boot-land.net)