SETHC.exe can also be replaced with a copy of explorer.exe (or any other .exe) giving full system level access from the logon screen as well. Not to repeat others, but if you are talking about server security, I would think that a certain amount of physical security is already in place. How much, depends on acceptable risk outlined by your organization.
I'm posting this to perhaps go a different route. If you are concerned that the user community in your organization can or will do this to the Windows 7 workstations (as you described in the question) the only way to circumvent these types of attacks is to "move" the compute into the datacenter. This can be accomplished with any number of technologies. I'll pick Citrix products to briefly overview the process, although many other vendors provide similar offerings. Using either XenApp, XenDesktop, Machine Creation Services, or Provisioning Services you can "move" the workstation into the datacenter. At this point (as long as your datacenter is secure) you have physical security over the workstation. You can either use thin clients, or fully capable workstations to access the desktop hosted from the datacenter. In any of these scenarios you would need some hypvervisor as the workhorse. The idea is that the security state of the physical machine the user is on is of minuscule risk regardless of whether it is compromised or not. Basically, the physical workstations only have access to a very limited number of resources (AD, DHCP, DNS, etc.). With this scenario, all data, and all access is granted only to the virtual resources in the DC, and even if the workstation or thin client is compromised, no gain can be had from that endpoint. This type of setup is more for large enterprises, or high security environments. Just thought I would throw this out as a possible answer.
27If someone has physical access to your computer, you can kiss security goodbye. – Bert – 2014-06-26T12:35:05.067
2It almost makes you want to switch to linux, where if you boot a repair disk you can just change the administrator password without the need of all the hack... – pqnet – 2018-03-25T07:17:52.877
3I really don't get what's the fuzz about it. It's not like there aren't utilities out there that can reset admin passwords (like the ones on Hiren's BCD or Win7Live). If the attacker can change the sethc file then he can use some reset utility... – EliadTech – 2014-03-24T08:35:33.590