I recently handled a support case for this issue. Here is a summary of the solution.
There is a KB article 912997 which talks about installation issues including one similar to what you are seeing.
The "Windows Installer .MSP Files Frequently Asked Questions" hot topic is available for Microsoft Dynamics GP
Have a look at Question 24.
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Usually we see this error when installing a Service Pack but I believe the resolution will be the same. The path name for the GreatPlains.msi file is stored in the registry. The path is to the GP installation CD or the folder where the install files were copied to. In order to resolve this problem you have two options.
Option 1:
You can un-install and then re-install Dynamics GP. This will correct the registry setting that stores the path to GreatPlains.msi.
Option 2:
You can manually edit the registry so the path to GreatPlains.msi points to the installation files. I would only recommend this path if you feel comfortable editing the registry. If you want to use option 2 you can use the following steps.
1. Open Registry Editor by going to Start and then Run. Then run the command regedit.
2. Make a backup of the registry by going to File | Export.
3. Select a location where you want to backup the registry. Make sure you have All selected in the Export range section. Click Save.
4. After you backup the registry go to Edit | Find.
5. In the find window type GreatPlains.msi and click the Find Next button.
6. There may be several entries so you need to find the one which lists a LastUsedSource entry. This is the entry you will need to edit. The entry will look something like this.
m;1;C:\Great Plains Installers\Dynamics GP 10.0\CD1\Bin
You need to change the path name so it is the location of the GreatPlains.msi file on the install CD.
7. After you edit the registry you can close regedit.
Try the integration again after changing the registry. If you still receive the error you can try re-installing Dynamics GP. By uninstalling this, it will remove the registry setting that is pointed to the incorrect path.
Uninstalling and Reinstalling the application will not remove any of your accounting data as this is stored in SQL.
David Musgrave [MSFT]
Escalation Engineer - Microsoft Dynamics GP
Microsoft Dynamics Support - Asia Pacific
Microsoft Dynamics (formerly Microsoft Business Solutions)
Any views contained within are my personal views and
not necessarily Microsoft Business Solutions policy.
This posting is provided "AS IS" with no warranties,
and confers no rights.