Error 1260: Windows cannot open this program because it has been prevented by a software restriction policy

Have you checked for malware or viruses?

Malware has been known to cause this issue.

mlmcc

Do try to scan the file first and you may want to check this hotfix
http://support.microsoft.com/kb/873419

In addition, please refer the following link to troubleshoot this issue just to verify the Default Settings for a Software Restriction Policy
http://technet.microsoft.com/en-us/library/bb457006.aspx#EDAA

May be good to find out more detail than the event log shows, you can enable verbose trace logging of SRP. This process generates a special SRP log file that records the rule that's used by SRP when it checks whether a specific program should be allowed to run.
http://windowsitpro.com/systems-management/q-how-can-we-verify-software-restriction-policy-srp-rule-we-defined-one-our-appli

To enable verbose trace logging of SRP, you must add a registry value named LogFileName of type REG_SZ to the following registry subkey: HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows\Safer\CodeIdentifiers. As the LogFileName value, enter the path to the SRP log file -- for example, c:\logs\srplog.txt.

You can also use the command line to enable and disable verbose SRP trace logging. To enable logging, enter

reg.exe add "HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows\Safer\CodeIdentifiers" /v LogFileName /d c:\logs\srplog.txt
To disable logging, enter

reg.exe delete "HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows\Safer\CodeIdentifiers" /v LogFileName /f

Looks like a problem with licensing on SQL Anywhere.


This server is not licensed to support the '%1' feature
Error constant       SQLE_FEATURE_NOT_LICENSED
ODBC 2 State       ERROR
ODBC 3 State       ERROR
Parameter 1       The unlicensed feature.
Severity       16
SQLCODE       –1260
SQLSTATE       0A002
Sybase error code       13253
Probable cause

You attempted to carry out an operation or use a feature that is not licensed in this edition of SQL Anywhere.

Have you checked for malware or viruses?

Malware has been known to cause this issue.

mlmcc

Ran AntiMalware Bytes scan and Sophos Endpoint securty scan. Neither showed any infection.

Do try to scan the file first and you may want to check this hotfix
http://support.microsoft.com/kb/873419

I did try installing this update prior to raising the question on EE however it is not supported for SP2.

In addition, please refer the following link to troubleshoot this issue just to verify the Default Settings for a Software Restriction Policy
http://technet.microsoft.com/en-us/library/bb457006.aspx#EDAA

I have actually just disjoined the server from the domain and tried installing the software. Same error occurs even without any GPOs applying.

Also, I do not have any software restriction policies configured on any GPOs on my domain.

you probably want to try in other machine instead or even try SQL Anywhere 12.0.1

http://scn.sap.com/docs/DOC-35654

May be good to find out more detail than the event log shows, you can enable verbose trace logging of SRP.

I've enabled verbose logging and here is whats been logged when executing the file...

msiexec.exe (PID = 1352) identified C:\Documents and Settings\All Users\Application Data\SQL Anywhere 12\Installation\SQLANY32.msi as Unrestricted using default rule, Guid = {11015445-d282-4f86-96a2-9e485f593302}

you probably want to try in other machine instead or even try SQL Anywhere 12.0.1

This is version 12.01.1. I may format and re-install windows on the server.

Have you check you server for any hard drive problems?

Ran a chkdsk /r and checked dell openmanage, no drive errors reported

All the latest firmware and drivers installed too

Have you thought about running the msi cleanup utility to see if there is something funky with the installer?

http://www.softpedia.com/progDownload/Windows-Installer-CleanUp-Utility-Download-18442.html

As a test can you try to install anther program that uses a msi...

fyi
utility to validate MSI packages
https://software.intel.com/en-us/forums/topic/321595
Microsoft Application Compatibility Toolkit (ACT)
http://www.microsoft.com/en-us/download/details.aspx?id=7352
How to troubleshoot issues with Windows installer service
http://support.microsoft.com/kb/2438651

As a test can you try to install anther program that uses a msi...

I've tried various other msi's... all install without issue.

Thank you everyone for your time and advice

I re-installed Windows and re-installed SQL anywhere + patch successfully before installing any updates or joining to the domain

I've requested that this question be closed as follows:

Accepted answer: 0 points for antonioking's comment #a40285306

for the following reason:

Not the ideal solution, but quickest way to resolve what was becoming a difficult issue.

have hoped my replied "ID: 40282835" has helped to suggest the rebuild though not the best means though..

Windows rebuild resolved my issue.

thanks for sharing!