It turns out that SMSS.exe had a lock on port 80 which was determined by following the suggestion of Alan on experts-exchange.com to run
netstat -ano |find /i "listening"|find /i ":80"
This told me which process id was listening to the port.
I then used SysInternals: Process Explorer to determine which program was connected to the process id. I decided to kill the SMSS process, disconnect the network cable and reboot the machine in the event that a virus/worm had hijacked SMSS.
Before rebooting, I had used Windows Service Wrapper (http://projectkenai.com/projects/winsw/pages/Home) to install nginx as a service with an Automatic start. Thank you Mister Dai for the suggestion ( http://misterdai.wordpress.com/2009/10/16/nginx-windows-service/ ) Once restarted nginx was running successfully. I reconnected the network cable and everything continued to work.
Now to determine if there was a virus or I had launched something else that caused SMSS to grab the port.
Hope this helps someone else
One final note, I don't know if this had an affect, but I added an exception in the Window's firewall for nginx.exe