This is Windows 2008 R2 with SQL Server 2012. Visual Studio 2010 is also installed.
I have used process monitor to view how setup is attempting to access various registry keys and local files, and one major problem is how it attempts to access 7.0A version of the SDK. I've tried various things to try trick the installer, but I am stuck. I am sure it is the gacutil utility it needs to make sure setup can continue, but installing Windows SDK 7.1 does not do the trick.
Anyone with any bright ideas before I create a support request on this. :-(
Here is a screenshot:
