EDIT: When I boot the computer, I get a notification stating that windows failed to communicate with the windows desktop services.
For me, the Log Me In Mirror Driver was the culprit.
I uninstalled that, and also Log Me In (which may not have been necessary to solve this), rebooted, and now the problem is fixed.
Aero troubleshooting and a Microsoft Fix It attempt did not find the problem.
I went back to check ALL default Windows 7 Services and found the Themes service had been set away from Automatic.
Then you can then select any Windows Aero theme and it will provide the toolbar transparency again Here's the interesting thing, I don't remember having altered the Themes service.