Yuck, it sounds like you're having major Windows installer issues.
I'd re-register your windows installer files, but I can't remember how to do that off of the top of my head, let me look around and get back to you on that.
Try this suggestion:
First, try the old faithful reboot; this error may be the result of an RPC
error. If a reboot does not clear the RPC error, you have bigger problems
than installing MSI packages!
Reregister the Windows Installer service by typing "msiexec /unregister" and
then "msiexec /regserver" at the command line.
If that doesn't work, take a look at this page, and follow the "Cleanup iTunes installer" Link
http://support.apple.com/kb/HT1926?viewlocale=en_US