mac installer not working

Having trouble with my iMac and the installer. I'm running up to date Lion 10.7.3. I first noticed this when I got an adobe flash update. Once I press the install button after the file has downloaded I get the usual computer admin box asking for my password. I fill this in and press OK and the admin box disappears but no installation happens. Its the same with any dmg file I download from the net but apps from the appstore download straight into launchpad fine. Its not that the password is wrong as when I do type an incorrect password the admin box jiggles in the usual apple incorrect fashion and stays on the screen.

Any thoughts people?? I have software I need to download! ARGGHHH etc etc