MSI Installer on Windows 2003 Server hangs during uninstallation and installation of programs.

Whenever I try to uninstall or install a program on our Windows 2003 Enterprise server (x32), the process hangs and eats up an entire processor core until I kill the msiexec.exe process.  Once the process is killed, I get the following error in the event viewer:
"Error 1719. The Windows Installer Service could not be accessed. This can occur if you are running Windows in safe mode, or if the Windows Installer is not correctly installed. Contact your support personnel for assistance."

I've run through all of the Microsoft repair steps I could find including these articles:
http://support.microsoft.com/kb/324516
http://support.microsoft.com/kb/315346
http://support.microsoft.com/kb/315353

I've also updated the MSI Installer to 4.5 with no change.  Does anyone have any other suggestions?

Thanks
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OAC TechnologyProfessional NerdsAsked:
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Vadim RappConnect With a Mentor Commented:
Another attempt to try: downgrade to Installer 3.1. I did see some bugs that were introduced in 4.5. Maybe it's another one.
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Vadim RappCommented:
Please enable detailed logging (mskb 223300), make Installer to hang, then collect log file and upload here.
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Carlito985Commented:
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OAC TechnologyProfessional NerdsAuthor Commented:
Attached
MSI36643.TXT
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Vadim RappCommented:
it says:

Server Locked: Install is suspended for product {CE16D92B-50F3-4FC5-B29C-13FAFEE1A6C6}
(...)
Error 1705. A previous installation for this product is in progress. You must undo the changes made by that installation to continue. Do you want to undo those changes?

Does this message show up during the installation?
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OAC TechnologyProfessional NerdsAuthor Commented:
Yes.  I can then click "yes" to undo the changes.  The installer proceeds and then hangs after that point
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Vadim RappCommented:
try to uninstall it first:

msiexec /x {CE16D92B-50F3-4FC5-B29C-13FAFEE1A6C6}

if this does not help, try to find in the registry the information about "previous installation in progress". I would first look for this product code {CE16D92B-50F3-4FC5-B29C-13FAFEE1A6C6}, and checked keys under HKLM/(anything)/Installer; as last resort, I would monitor the installation with Process Monitor (www.sysinternals.com) and tried to figure where it finds that. If you find it, delete that registry key, so it does not know about the previous installation.
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OAC TechnologyProfessional NerdsAuthor Commented:
Even when I remove the pending uninstallation and try uninstalling another program, it goes through the same process and hangs at the same point: "Gathering required information"

I've attached another log; this one without MSI asking about another installation in progress.

Thanks
MSIaf154.txt
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Vadim RappCommented:
Error 1601 the log ends up with, means "out of disk space" - let's check for that, including running chkdsk.
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Vadim RappCommented:
also, from the log it appears that it was trying to uninstall: it has

MSI (s) (80:CC) [10:29:15:731]: Determined that existing product (either this product or the product being upgraded with a patch) is installed per-machine.

and also

Command Line: REMOVE=ALL

So the next step would be using Installer Cleanup Utility and removing installed product.
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OAC TechnologyProfessional NerdsAuthor Commented:
I have about 5GB free on the Windows partition and after a reboot and checkdisk, the same problem occurs.  
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OAC TechnologyProfessional NerdsAuthor Commented:
The problem is for all installed products, though.  Using the Installer Cleanup Utility may remove the products manually, but won't solve the issue with the actual MSI installer
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Vadim RappCommented:
ok, then let's try to remove the existing product. Does it show up in add/remove programs?

Try Installer cleanup utility
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Vadim RappCommented:
also, according to http://support.microsoft.com/kb/321497 , error 1601 may be the result of damaged Installer registration. Try it.
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OAC TechnologyProfessional NerdsAuthor Commented:
I've tried unregistering and re-registering as instructed by that KB.  How do I attempt to downgrade to 3.1?
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Vadim RappCommented:
Find KB 942288 (may be with suffix -v<numebr>) in add/remove programs (with "show updates" checkbox enabled), and uninstall.
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Vadim RappCommented:
numebr = number
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OAC TechnologyProfessional NerdsAuthor Commented:
After uninstalling the update and rebooting, the problem persists
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Vadim RappCommented:
You said it happens with every installation. Does it mean that every installation ends with error 1601?

Try this installation; will it happen? will it have 1601 error n the log?

https://filedb.experts-exchange.com/incoming/ee-stuff/8090-test.MSI
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Vadim RappCommented:
Thanks for accepting the answer; but since it is going into the knowledge base, maybe you could share if the problem was actually resolved, and how. You said that downgrading did not help, but then accepted exactly that suggestion, so maybe you could clarify for those who will read it in KB.
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