Thanks for all the comments and tips everyone. BentlyTCow thanks for your install record and Robert thanks for also pointing out the driver files.
After a week of recovery efforts, I finally have some time to catch my breath and post an update.
As far as I can tell, I must have had a hard drive failure which coincidentally happened just after installing Paragon VM to that drive when it asked to reboot the system. Before that, the drive had shown no signs of failure, no sounds, errors or signs of file corruption. Just before installing Paragon VM I was browsing around on the drive and I downloaded the installer and set it up on that drive. Then I let it reboot the system and POOF the drive had failed.
After trying a few things without success, I simply unplugged the drive (my secondary D: drive) and I was able to boot the System with only the main system drive C:. Unfortunately, many files, installed Programs and my page file were on D.
After failing to read or recover anything with Windows utilities, I spent most of the past week trying a few flavors of Linux recovery CDs. I was able to make a partial image of the corrupted drive with ddrescue. After making a second backup, I ran CHKDSK on that and had a readable drive (copy) with some intact files, but many other files were only empty zeroed out files (viewed in a hex viewer) with the names and paths recreated from the index by CHKDSK, but without any data or program content. So, I made a second copy of the ddrescue file and ran Photorec on it. I'm still combing through those files (which are just randomly named and sorted by extension), but there are a few more files I was able recover by that method. At the same time, I dug through all my old backup discs and managed to find a few more files. So, through all methods combined, I have found a majority of the important files, although not all and there were plenty of lower priority files which are completely gone.
It was interesting to note that the Paragon VM setup file and program files were completely gone. I haven't turned up any sign of them in any recovered files, although the C: system drive and registry do show Paragon VM as installed (on the dying drive).
After recovering most of my key files, I decided to give Paragon VM another chance. This time I was able to successfully install and reboot without any problems. I've made a couple test images of my C: system drive and now I've got one running in VirtualBox. The Adjust P2V for running in a VM option didn't work for me. I used some registry settings and system drivers from a VirtualBox Windows imaging guide and that finally worked.
So, it's been quite an adventure. I just wanted to try out Paragon VM to see if I could make a working image of an older system and I ended up with a lot more trouble than I excepted. Anyway, now I have finally ended up with a working virtual image of the System, but unfortunately I lost a real drive and some data in the process.