I encountered an error today when installing the Reporting Services Designer components into Visual Studio.NET 2003 on a Windows XP workstation. If you search on this error there are a couple of long winded articles that describe fixes and workarounds as the error can have multiple causes.
There is a simple scenario that isn't covered in most of these kb's.
If you are installing the components onto a machine that does not have IIS installed then you will receive this error as the install routine looks for a user called 'ASPNET'. If this user does not exist then the installation fails with error 1603.
To resolve the issue simply create a local windows user called 'ASPNET' - this user does not need to have any group memberships or special password they simply need to exist.