This error is due to the office installer not seeing files in the c:\program files\common files\microsoft shared\web server extensions\40\bin.
I’m not sure why they weren’t their as it was a fresh install of xp pro sp3 off the dell cd, but the solution to this error is to install the Frontpage 2000 server extensions.
Go to control panel – add/remove programs – add/remove windows components highlight iis and click details, tick the Frontpage 2000 server extensions box, it also ticked a couple more boxes on my install, I suppose it depends what you are missing, and click ok.
It may need the disk so have that handy if you haven’t got the i386 folder on your hard drive.
Then try reinstalling office 2007.