Comment 10 for bug 704609

Certainly SxS related. Interestingly the pywin32 modules also fail to load with manifest issues (and bzr just uses ctypes instead), but they have a bit-for-bit identical embedded manifest as the bzrlib pyd bits that load fine.

There's an outside chance this is related to <http://support.microsoft.com/kb/912949> in which case it might be worth trying that workaround:
In HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\SideBySide
Set PreferExternalManifest to (DWORD) 1.