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The most likely cause of this error is that the Windows Installer database on your machine has been corrupted. I recommend downloading and running the Windows Installer Cleanup Utility from Microsoft. I expect it will indicate that AIR is installed; if so, remove it. Then try installing AIR 1.1. again.
I have the same problem: this morning Adobe AIR presented a new version: AIR 1.1, which I installed. Same error message about the installation prevented by Administrator. Now I can't run any AIR-apps.
I tried running the installer as Administrator, without success.
I ran Windows Installer Cleanup Utility and removed the AIR-entry and installation was again without success.
I tried to install AIR 1.0, also with the same unwanted result.
I run Vista Home Premium SP1.
Thanks, contrary to Ed's problem, that did solve my issue.
@Edwinm: If these steps didn't work for you then you probably don't really have the same problem. You should capture a log file of the failing install.
Try running the installer from the command line and adding a -uninstall flag. Then try re-installing. Post back here your results.
Running the installer with the -uninstall command line option did work. After this, the installer completed successfully. Thanks.