SCCM Fatal Error during install

I am getting the following error durring installation of SCCM 2007

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Fatal Error
Configuration Manager Setup Cannot Continue Because of the following
Error:
Setup cannot create the required database tables. Contact your SQL
administrator
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My setup is a windows 2003 R2 with SP2 server, local SQL 2005 SP2. I
am getting the following in the install logs

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 ERROR(13): Failed to iterate cab file.
 ERROR(13): Failed to expand the look up table files to the folder: D:
\Program Files\Microsoft Configuration Manager\AI.
 Setup cannot create the required database tables.  Contact your SQL
administrator.
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The user i am installing with has sys admin permissions in the SQL DB
as well as local admin rights


Everything is a fresh install i loaded 2k3 R2 then SQL 2005 then the
SQL service packs and finally SCOM. Then i get the error while trying
to install SCCM