I had an online chat with someone from Adobe online support. I was told that Adobe has does not provide support for AIR, which I found astonishing. No progress there. There is something on the msigeeks page: Troubleshoot the error 1603 “Fatal Error During Installation” that might help but I am having trouble understanding exactly what they are suggesting. It might be worth contacting Microsoft for help with Windows Installer but it is a bit of a maze to navigate online to the right expert.
I followed a suggestion from another forum that the problem might be anti-virus software stepping in somewhere but I tried turning of my Norton auto-protect but this made no difference.