I have spent the better part of my day on chat with Microsoft to try to resolve this.
They took remote access to my PC on multiple occasions and tried the following.
Uninstalled my Anti-Virus and Firewall
Reboot.
Start->Run->MSConfig
Through MSConfig under Services click "Hide all Microsoft Services" then select Disable All.
Under the Startup tab, select "Disable All", then click Apply and OK.
Reboot, then try the install.
Still no luck, hangs up on 98%.
Then through another remote access session, they tried the following.
They created a batch file called registry.bat which contained the following
Code:
net stop cryptsvc
net stop wuauserv
ren %windir%\system32\catroot2 catroot2.old
ren %windir%\SoftwareDistribution SoftwareDistribution.old
regsvr32 comcat.dll /s
Regsvr32 Msxml.dll /s
Regsvr32 Msxml2.dll /s
proxycfg -u
Regsvr32 Msxml3.dll /s
regsvr32 shdoc401.dll /s
regsvr32 cdm.dll /s
regsvr32 softpub.dll /s
regsvr32 wintrust.dll /s
regsvr32 initpki.dll /s
regsvr32 dssenh.dll /s
regsvr32 rsaenh.dll /s
regsvr32 gpkcsp.dll /s
regsvr32 sccbase.dll /s
regsvr32 slbcsp.dll /s
regsvr32 mssip32.dll /s
regsvr32 cryptdlg.dll /s
regsvr32 wucltui.dll /s
regsvr32 shdoc401.dll /i /s
regsvr32 dssenh.dll /s
regsvr32 rsaenh.dll /s
regsvr32 gpkcsp.dll /s
regsvr32 sccbase.dll /s
regsvr32 slbcsp.dll /s
regsvr32 asctrls.ocx /s
regsvr32 wintrust.dll /s
regsvr32 initpki.dll /s
regsvr32 softpub.dll /s
regsvr32 oleaut32.dll /s
regsvr32 shdocvw.dll /I /s
regsvr32 shdocvw.dll /s
regsvr32 browseui.dll /s
regsvr32 browseui.dll /I /s
regsvr32 msrating.dll /s
regsvr32 mlang.dll /s
regsvr32 hlink.dll /s
regsvr32 mshtmled.dll /s
regsvr32 urlmon.dll /s
regsvr32 plugin.ocx /s
regsvr32 sendmail.dll /s
regsvr32 scrobj.dll /s
regsvr32 mmefxe.ocx /s
regsvr32 corpol.dll /s
regsvr32 jscript.dll /s
regsvr32 msxml.dll /s
regsvr32 imgutil.dll /s
regsvr32 thumbvw.dll /s
regsvr32 cryptext.dll /s
regsvr32 rsabase.dll /s
regsvr32 inseng.dll /s
regsvr32 iesetup.dll /i /s
regsvr32 cryptdlg.dll /s
regsvr32 actxprxy.dll /s
regsvr32 dispex.dll /s
regsvr32 occache.dll /s
regsvr32 occache.dll /i /s
regsvr32 iepeers.dll /s
regsvr32 urlmon.dll /i /s
regsvr32 cdfview.dll /s
regsvr32 webcheck.dll /s
regsvr32 mobsync.dll /s
regsvr32 pngfilt.dll /s
regsvr32 licmgr10.dll /s
regsvr32 icmfilter.dll /s
regsvr32 hhctrl.ocx /s
regsvr32 inetcfg.dll /s
regsvr32 tdc.ocx /s
regsvr32 MSR2C.DLL /s
regsvr32 msident.dll /s
regsvr32 msieftp.dll /s
regsvr32 xmsconf.ocx /s
regsvr32 ils.dll /s
regsvr32 msoeacct.dll /s
regsvr32 inetcomm.dll /s
regsvr32 msdxm.ocx /s
regsvr32 dxmasf.dll /s
regsvr32 l3codecx.ax /s
regsvr32 acelpdec.ax /s
regsvr32 mpg4ds32.ax /s
regsvr32 voxmsdec.ax /s
regsvr32 danim.dll /s
regsvr32 Daxctle.ocx /s
regsvr32 lmrt.dll /s
regsvr32 datime.dll /s
regsvr32 dxtrans.dll /s
regsvr32 dxtmsft.dll /s
regsvr32 WEBPOST.DLL /s
regsvr32 WPWIZDLL.DLL /s
regsvr32 POSTWPP.DLL /s
regsvr32 CRSWPP.DLL /s
regsvr32 FTPWPP.DLL /s
regsvr32 FPWPP.DLL /s
regsvr32 WUAPI.DLL /s
regsvr32 wups2.dll /S
regsvr32 WUAUENG.DLL /s
regsvr32 ATL.DLL /s
regsvr32 WUCLTUI.DLL /s
regsvr32 WUPS.DLL /s
regsvr32 WUWEB.DLL /s
regsvr32 wshom.ocx /s
regsvr32 wshext.dll /s
regsvr32 vbscript.dll /s
regsvr32 scrrun.dll mstinit.exe /setup /s
regsvr32 msnsspc.dll /SspcCreateSspiReg /s
regsvr32 msapsspc.dll /SspcCreateSspiReg /s
proxycfg –d
sc sdset wuauserv
D:(A;;CCLCSWRPWPDTLOCRRC;;;SY)(A;;CCDCLCSWRPWPDTLOCRSDRCWDWO;;;BA)(A;;CCLCSWLOCRRC;;
;AU)(A;;CCLCSWRPWPDTLOCRRC;;;PU)
regsvr32 mshtml.dll /s
net start cryptsvc
net start wuauserv
Then ran that file as administrator.
Downloaded a file from Microsoft.com titled "subinacl.msi" installed it, created a command file called "reset.cmd" which contained the following
Code:
@echo off
title Resetting ACLs...
cd /d "%ProgramFiles%\Windows Resource Kits\Tools"
echo.
echo Resetting ACLs...
echo (this may take several minutes to complete)
echo.
echo ==========================================================================
echo.
echo.
subinacl /subkeyreg HKEY_LOCAL_MACHINE /grant=administrators=f /grant=system=f
echo.
echo.
subinacl /subkeyreg HKEY_CURRENT_USER /grant=administrators=f /grant=system=f
echo.
echo.
subinacl /subkeyreg HKEY_CLASSES_ROOT /grant=administrators=f /grant=system=f
echo.
echo.
echo System Drive...
subinacl /subdirectories %SystemDrive% /grant=administrators=f /grant=system=f
echo.
echo.
echo Windows Directory...
subinacl /subdirectories %windir%\*.* /grant=administrators=f /grant=system=f
echo.
echo.
echo ==========================================================================
echo.
echo FINISHED.
echo.
echo Press any key to exit . . .
pause >NUL
Ran that as administrator, let it run and finish up.
Ran msconfig again, turned off all services that were not Microsoft, shut down all Statup processes, then reboot.
After that I was told to try again, so I proceeded to try again. Still no luck, hangs up at 98% before reverting itself.
At this time, their hours of service are over, so I cannot contact them again.
End result is, I still have the problem, SP1 is not installed, and I have no anti-virus or firewall at the moment. But maybe those steps will work for someone else.