@JeffSchwenk - Thanks Jeff. They were very helpful and knew the resolution right away. For the record:
1.Install the following service pack from
http://support.microsoft.com/kb/925336.
2.Reboot.
3.Try to install again.
If the error still occurs, do the following:
1.Go to: Start > Run > Type control admintools > Click OK.
2.Double-click Local Security Policy > Click Software Restriction Policies.
oNOTE: If no software restrictions are listed, right-click Software Restriction Policies, and then click Create New Policy.
3.Under Object Type: double-click Enforcement > Click All users except local administrators > Click OK > Reboot.
Cause
This problem occurs in Windows Server 2003 if the Windows Installer process has insufficient contiguous virtual memory to verify that the .msi package or the .msp package is correctly signed.