I had this exact issue - I didn't bother with trying to solve it until iTunes 11 released.
1) Follow these instructions to remove all Load at Startup items.
This should remove any prior Apple items from loading. I went ahead and disabled every item that was being loaded, including my anti-virus.
3) Disable Windows Firewall. (I did this as extra precaution in case I was somehow blocking ports that iTunes uses to download add'l packages.)
4) Run the downloaded iTunes installer. It worked! Finally! It finally progressed past "Processing Additional Packages" and then asked me for Admin permission to allow iTunes to make changes (aka update itself).
5) Turn your Windows Firewall back on.
6) Turn all the Load at Startup items back on, and reboot.
7) Run and enjoy the greatly improved iTunes 11.