The windows installer is a service within the operating system and with a
lot of the services, once they are broken, to repair them takes a bit of
work. You can go the services list, by right clicking on my computer and
choosing manage, then under the services and applications option, there is
one called services. When you choose this, a list comes up and it should
have the windows installer, right click this and go to the properties.
Choose to stop the service and then restart the computer, this will more or
less give it a boost to see if it is going to work. If it does work after
the restart, then it should be fine, but if it only works one time or so
after the restart then it is in need of further repairs. To do this, you may
want to do an in-place upgrade(repair) of the operating system. The
following knowledge base article explains how to do it.
http://support.microsoft.com/default.aspx?scid=kb;en-us;315341
However, when doing an inplace upgrade, it may lose device drivers and any
updates for windows that were done to the system, so you will have to do
these over. Device drivers are the main ones, cause you can always get back
to the windows updates site to redownload any of them.