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EPO Agent fails to install

I'm installing an agent (CMA3.6.0.569) on several servers (Server 2003 Sp2) and it's failing to install giving this error.

There was an unexpected error during setup execution. See log details: C:\documents and settings\username\local Settings\Temp\NAILogs\FrmInst_Servername.log

The contents of the log file are:

20071220203007 I #3328 Stub Pkg START ["C:\Documents and Settings\username\Desktop\FramePkg-stud.exe" ]
20071220203007 I #3328 Common Pkg CreateDirectory (C:\DOCUME~1\username\LOCALS~1\Temp\unz9.tmp)
20071220203008 I #3328 Stub Pkg System=0
20071220203008 I #3328 Common Pkg CreateProcess (C:\DOCUME~1\username\LOCALS~1\Temp\unz9.tmp\FrmInst.exe, /CreateService="C:\Documents and Settings\username\Desktop\FramePkg-stud.exe" /LOGDIR="C:\DOCUME~1\username\LOCALS~1\Temp\NAILogs" /Cleanup2="C:\DOCUME~1\username\LOCALS~1\Temp\unz9.tmp" /EmbeddedUsername="username" /EmbeddedDomain="domain" /EmbeddedPassword="" /Install=Agent)
20071220203008 I #3328 Common Pkg WaitForSingleObject (C:\DOCUME~1\username\LOCALS~1\Temp\unz9.tmp\FrmInst.exe, -1)
20071220203010 I #3340 naCmnLib Ins Random seed = 0x761d****
20071220203010 I #3340 Setup Ins START [/CreateService="C:\Documents and Settings\username\Desktop\FramePkg-stud.exe" /LOGDIR="C:\DOCUME~1\username\LOCALS~1\Temp\NAILogs" /Cleanup2="C:\DOCUME~1\username\LOCALS~1\Temp\unz9.tmp" /EmbeddedUsername="username" /EmbeddedDomain="domain" /EmbeddedPassword="" /Install=Agent]
20071220203010 I #3340 Setup Ins Windows 5.2.3790 Service Pack 2
20071220203010 I #3340 Setup Ins Restarting as a service to get System rights
20071220203010 I #3340 Setup Ins This package seems to be created by ePO 3.5 or higher
20071220203011 E #3340 LgOnUsr Ins Error trace:
20071220203011 E #3340 Thread Ins [Main thread]->
20071220203011 E #3340 Setup Ins [Restarting as a service to get System rights]->
20071220203011 E #3340 Setup Ins [Possibly impersonate]->
20071220203011 E #3340 LgOnUsr Ins [AcceptSecurityContext]->
20071220203011 E #3340 LgOnUsr Ins error -2146893044: The logon attempt failed
20071220203012 E #3340 UI Ins Error trace:
20071220203012 E #3340 Thread Ins [Main thread]->
20071220203012 E #3340 UI Ins There was an unexpected error during setup execution. See this log file for details: C:\DOCUME~1\username\LOCALS~1\Temp\NAILogs\FrmInst_NASDC2.log

I initially thought this was only one server that was given me grief until I started installing on the others.
The servers already had an installation of VSE 8.5 and was a new install.
I removed VSE8.6 and used the MCPR tool to clean the registry. I reran the agent installer and continue to get these errors.
I'm running the installer under admin and have full access to the system. I've checked the file security, nothing untoward.
I have also removed the enhanced IE 7 secutiry settings from add remove windows/components in case thats affecting it.
Usually the agent is installed here via a batch file across the network but right now not even installing it locally is working.
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