The culprit was Seagate backup software that came with the external hard drive. I foolishly installed the software and it duly corrupted VSS. Most frustrating, uninstalling the backup software didn't restore VSS. So I was forced to do a repair/upgrade/re-install of Windows 7. That repaired VSS, but the process is like killing a gnat with a sledge hammer.
Did the "upgrade" before seeing your response. So don't know if the other VSS repair tools would have worked.
However, I have to believe I'm not the only Windows user who's corrupted VSS writers (and, with it, disabled creating restore points) with fancy new backup software. If you can repair VSS with an easy tool (anything easier than re-installing Windows 7!) after it's been corrupted by other backup software ...