Good to hear! here are the recommendations I posted in our "support" alias:
Try the following:
1) Uninstall Kodu (and XNA 3.1), and try re-installing; ensure you have latest version (we pushed a new build last week)
2) Download a game from www.kodugamelab.com ; then, try launching the game.
3) Try on another (similar) computer
In reading the description, it sounds like somehow a file became corrupt. User permissions seem OK, as you were able to launch a play a title.
Good luck, and have fun Koding!
I’ll post the same on your thread below, in case there are other ideas by the community.