How are you installing Microsoft Office, from a network location, (Click to Run) or DVD/CD? You could try copying the contents of the disk to a folder on your desktop and start the setup there.
If Windows Installer logging is enabled, the following line should be noted as a symptom:
“Error 1606. Could not access network location %APPDATA%”
The problem is potentially a result of an inconsistent/incorrect environmental variable (%AppData%).
1. Open the Registry editor
2. Navigate to the following registry keys HKEY_USERS\.DEFAULT\Software\Microsoft\Windows\CurrentVersion\Explorer\User Shell Folders
3. The correct and default value for AppData should be: %USERPROFILE%\AppData\Roaming
4. Close the Registry editor, and try again Windows Update again. (A reboot should not be required.)
5. If the problem persists, repeat the steps 2 through 4 with the following registry keys: