That also didn't help. We have been searching for 3 days on several pc's but to no avail until we discovered that it DOES install with acrobat reader 9 removed.
The ie7-main.log file
.....
01:06.719: INFO: |Inst. IE >>> Waiting for Internet Explorer installation to complete...
01:06.750: INFO: Process 2524 created for 'update.exe /quiet /norestart /er /log:C:\WINDOWS', starting in path 'c:\8ddd975ba777d16df860668090b2\update'
01:08.062: INFO: Process 'update.exe /quiet /norestart /er /log:C:\WINDOWS' exited with exit code 1013
01:08.078: INFO: Acquired Package Installer Mutex
01:08.094: ERROR: |Inst. IE >>> Internet Explorer installation completed with errors, exitresult=0x00000000, exitcode=0x000003f5
01:08.094: INFO: |Inst. IE >>> <[END]--------------------------------
...
...
...
...
01:08.484: INFO: |Finalize >>> <[END]--------------------------------
01:10.031: INFO: REBOOT: required.
01:10.047: INFO: REBOOT: User selected to reboot later.
01:10.094: INFO: Installer return value: hr=0x00000000
01:10.156: INFO: Setup exit code: 0x00000000.
01:10.172: INFO: Installer Process exit code: 0x000003f5.
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