I agree that it is quite possibly the windows installer. I posted the article:
http://support.microsoft.com/kb/555175/en-us from Microsoft Support early in this thread. That didn't work for me, but maybe it will work for you. I also tried to install a different application that using MSI, and it worked fine.
By the way, I already installed and got past this issue. I just double-clicked the setup file a thousand times. I'm still interested in finding out what the issue is since the client that had this issue is still a client and I will one day need to do something with BES on that server.
Bradley