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When installing some software, I got the error:

This installation is forbidden by system policy. Contact your system administrator.

Make sure that windows installer service is running. Also, there are local security policy settings and registry keys that can prevent you from running MSI files. This was not problem here. All I had to do was copy the cd to a directory on my hard drive and run the installer from there. Violla! Installation is no longer forbidden! I believe that instead of the system policy being the problem, this program needed write access to the installation directory.

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