Seems the windows installer service has gone corrupt due to some reason. Try the bellow suggestions and check if that helps.
1. Reboot the machine in normal mode, if logged in in safe mode.
2. GoTo Run->services.msc and start or re-start the windows installer service.
3. Un-register and re-register the windows installer service. Follow http://support.microsoft.com/kb/319624
4. Try re-registering or re-installing the windows installer service manually Follow http://support.microsoft.com/kb/315346
Contact, MS in case of same issue as they are the expert on windows installer.
