My problem is solved after following the suggestion posted in this thread.
https://forums.openvpn.net/topic7663.html
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In our case, running McAfee software left the registry on our Win7 machine in a bad state. Cleaning out the "ghost" network interfaces with the tool at
https://skydrive.live.com/redir?resid=8 ... PB4O4uVxek allowed us to install the TAP device driver without any further issues.
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I think, this is one of the weak links (I see many people hit this problem when I google it.) which needs to be documented clearly in openssh documentation.