I am the developer for an application and we package SQL Server 2008 Express w/SP3 with the application installer. The installer installs the SQL server instance first, sets up the required databases, and then the application, which uses the instance, is installed. Recently, our customer made some changes to the operating system images, which caused the sql server installer to start failing. I don't know what the changes were that are causing the problem. But, I have attached the sql server log file that identifies the point of failure. I've looked into group policy settings, permissions on the registry folder, the sa rights, but have not identified anything that should be preventing the update. I already know that the sa account must have the following rights (and the sa account does): "Back up files and directories", "Debug Programs", and "Manage auditing and security log". The Administrator group has all privileges on the folder in registry question. I've looked into group policy settings (as much as I know how) and have found nothing. What could possibly be causing the error in the attached error. The screenshot error is what I get when I step through the installer. The log file (at the end) is what I get when I run the installer using usual "silent/quiet" method \QS.