More information after an uninstall and reinstall:
$ cat .airappinstall.log
Starting app install of http://location/file.air
UI SWF load is complete
Downloading file to /tmp/FlashTmp.EIau3j
Received HTTP Response Status event
Response URL is http://location/file.air
Waiting for user confirmation
User confirmed action: install
Unpackaging to /tmp/FlashTmp.tylaQZ
failed while unpackaging: [ErrorEvent type="error" bubbles=false cancelable=false eventPhase=2 text="Error #2058" errorID=2058]
starting cleanup of temporary files
application installer exitingThis says it's something to do with decompression. I am able to open and extract the file myself with archive manager on linux.
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Can you tell us which version of AIR is installed on your system?
Is the issue reproducible with the latest beta2: http://labs.adobe.com/downloads/air2.html
Also will it be possible for you to share your AIR application?
Got to the bottom of it. The version of air installed was 126.96.36.19970. When we upgraded both machines it failed on to 1.53x the error went away. I haven't tried Air2 beta yet, trying soon. I'll post the results.
If you want to email me I can send you the installer for analysis.
Works fine on air beta 2 as well.