From Microsoft Connect:
Until Microsoft come up with an official solution there is a working workaround for this problem.
This problem only appears to affect people who have not got Visual C++ Installed.
1.) Download VS90SP1-KB971092-x86.exe from here …
2.) Start the installation VS90SP1-KB971092-x86.exe
3.) Wait for the error message to come up – DO NOT CLOSE THE WINDOW!
4.) Copy the temp. folder where the patch has been unpacked to a new folder, for example onto your desktop.
5.) Close VS90SP1-KB971092-x86.exe that you started in 2.)
6.) Navigate to <drive>:\Program Files\Microsoft Visual Studio 9.0\Common7\Tools and find vsvars32.bat.
7.) Change the permissions on the file to allow everyone to edit it.
8.) Start VS90SP1-KB971092-x86.msp from within the saved folder and the process should complete.