I have come across this forum discussion which might be relevant: wix-users - SECREPAIR: CryptAcquireContext: Could not create the default key container.
It appears that the problem has been caused by a Microsoft Windows security update, KB2918614. This was applied to my PC on 14 August but I think it was released on 12 August.
I used Windows Update > View Update History > Installed Updates to uninstall KB2918614. After a Restart, I managed to install AIR.
My Windows version is Vista and I don't know if this problem and solution applies for other versions.