The install location is defined in the CommonFilesDir registry key.
To resolve this issue, change the Value field of the CommonFilesDir registry key to a drive letter that is available on the virtual machine.
To change the Value field of the registry key:
Note: This procedure modifies the Windows registry. Before making any registry modifications, ensure that you have a current and valid backup of the registry and the virtual machine. For more information on backing up and restoring the registry, see the Microsoft Knowledge Base article How to back up and restore the registry in Windows.
Workaround:
If you ran into this issue due to windows updates. Resolution for this case was as follows:
Find and then click the following registry subkey: HKEY_LOCAL_MACHINE\COMPONENTS
Right-click COMPONENTS and click Export.
In the File Name box, type COMPONENTS.
In the Save in box, click Desktop, and then click Save to save the file to your desktop.
In the details pane, right-click PendingXmlIdentifier, and then click Delete. If this value does not exist, go to the next step.
In the details pane, right-click NextQueueEntryIndex, and then click Delete. If this value does not exist, go to the next step.
In the details pane, right-click AdvancedInstallersNeedResolving, and then click Delete. If this value does not exist, go to the next step.
Restart the computer.
Also if you run the vcdislist.exe and try and install the Microsoft distribution list you may encounter an error.