Not sure if this has been posted in any of the discussions regarding this issue in the forums...
I tried everything suggested, including uninstalling all the components of iTunes in order, rebooting and reinstalling, running as administrator, etc etc but none of these solutions worked.
After spending 5 hours on the phone to Apple support (thanks Angelos - very helpful), we discovered that the corrupt .dll file that was causing the problem was not in the iTunes folder within Program Files, but was in the Common Files folder, in a subfolder called 'Apple'.
By moving all the .dll files from this folder to the desktop, I was finally able to completely remove iTunes and do a clean install. Now everything works fine, finally!
Maybe this fix will be a last resort solution for anyone else for whom all other suggested fixes do not work!