adam,
Let me work the problem from a slightly different angle because it looks like you've gone through the standard tricks with b noir for making sure you have the right version of the InstallShield stuff.
But I've also seen this error when for some reason InstallShield is running in the background, even if you've rebooted. One of the tricks to make sure you don't have a rogue copy of InstallShield running is to download, install, and run the Microsoft Installer Cleanup Utility.
http://support.microsoft.com/default.aspx?kbid=290301
Sometimes when you run that utility, it will tell you that an installation is running, do you want to stop it -- and the answer is of course yes.
So, try that. Then delete the contents of your temp folder which is usually,
C:\Documents and Setting\<username>\Local Settings\Temp
Don't worry if you can't delete everything because some files will be in use by the browser and whatnot, just delete what you can.
Then download and run the installer again -- but we're going to run it in logging mode so that when it fails, you'll have a file to send off to the Apple engineers. To run it in this logging mode:
1. Start menu -> Run... In the text field of the dialog that comes up, type in "cmd" and hit return.
2. In the command prompt dialog that comes up, find the iTunesSetup.exe installer on your desktop and drag it to this window. Then on the same line type in a space and then the following:
/Verbose"c:\log.txt"
There is no space between the e in Verbose and the double quote (").
4. Hit return.
5. The installer will create a log file:
C:\log.txt
If the install doesn't work this time, find that file and
send them to the apple moderator. Tell her Toonz sent you. It doesn't hurt to put the URL to this discussion thread, so that whoever gets it has some context.