This issue may occur is the SYSTEM or Everyone group does not have Full Control privileges.
1. On Windows 7, locate the folder for which the error message appears
2. Right-click the folder and select Properties
3. On the Properties window, select the Security tab
4. Click on Advanced at the bottom right-hand corner
5. Select Change permission
6. Click on Add and type Everyone and select OK
7. Provide Full Access for Read/Write and then run Office Setup
For further information referKB 313222
WARNING: Following the steps incorrectly given in the above link may cause serious problems that may require you to reinstall your operating system. Microsoft cannot guarantee that you can solve problems that result from using the above link incorrectly. Try the steps at your own risk since this may delete the non-Administrator account types.
Ganesh Kumar N