From the Setup log you provided, the error is occurring in the Visual C++ 2008 x86 package. Generally, a good practice to quickly get to the cause of the issue is to enable the verbose logging for Windows Installer,
Then launch the Visual C++ 2008 x86 package manually from the 3rdParty\x86\VCREDIST folder. You can then gather the windows installer log that will be generated in the TEMP directory, accessed by typing '%temp%' in the START > RUN. Feel free to attach that log (zipped or compressed please) and I can help you find out what is triggering the 1603 error.