Where is Windows Aero?
Typically you start with the Personalization screen
and go to Windows Color and Appearance screen
And you click on "Open classic appearance properties for more color options" link to get to the following
For my case, when I would select "Windows Color and Appearance" (first figure above), I would directly come to "Appearance Settings" (this previous figure) and "Windows Aero" wasn't listed there. The Aero related files were present in C:\Windows\Resources folder and the Windows Experience Index base score was 3.1 as shown in Performance Information and Tools dialog.
So what was really wrong? Ronnie from the Vista forum finally pointed out to this excellent troubleshooting site - CleverCretin's Ultimate Step-by-Step Guide to Troubleshooting Windows Aero. It takes you through various steps in a very user friendly manner. What finally helped in my case was the section that talked about when using remote desktop connection, Vista may switch to basic and after closing the session, Aero may not re-engage. I recalled that the last time Aero worked for me, I was getting onto a desktop sharing session with a colleague using office communicator. The desktop sharing, causes Vista to switch to Basic and after that session had closed, I seemed to have lost Aero.
So I did a new session with another colleage, did desktop sharing and then closed the session. When I then checked the Color and Appearance dialog, Windows Aero was there!!! Pretty freaky, isn't it, but my problem did get solved.