Windows XP SP3 Internet Explorer 7/8 error “Internet explorer installation did not complete “

First have a look at this Microsoft KB article.

http://support.microsoft.com/kb/917925/en-us

See if that helps you any. Pay special attention to Method 2: Reset permissions for any unwriteable registry subkeys
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Otherwise, try this:

Download the SubInACL tool and install it. By default it will install to c:\Program Files\Windows Resource Kits\Tools

SUBINACL

Go to the Start menu, choose Run, type cmd and click OK
In the cmd window, type cd /d “%ProgramFiles%\Windows Resource Kits\Tools” to change directories to the folder that SubInACL is installed to
Type notepad reset.cmd and click yes to create a new file named reset.cmd in c:\Program Files\Windows Resource Kits\Tools
Copy and paste the following contents into reset.cmd and then save and close it:

subinacl /subkeyreg HKEY_LOCAL_MACHINE /grant=administrators=f 
subinacl /subkeyreg HKEY_CURRENT_USER /grant=administrators=f 
subinacl /subkeyreg HKEY_CLASSES_ROOT /grant=administrators=f 
subinacl /subdirectories %SystemDrive% /grant=administrators=f 
subinacl /subkeyreg HKEY_LOCAL_MACHINE /grant=system=f 
subinacl /subkeyreg HKEY_CURRENT_USER /grant=system=f 
subinacl /subkeyreg HKEY_CLASSES_ROOT /grant=system=f 
subinacl /subdirectories %SystemDrive% /grant=system=f

Type reset.cmd and press enter to run the SubInACL tool (you will need to have administrator privileges for this to run correctly). This tool will take several minutes to run.
After reset.cmd completes, try to install IE7/8.

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