Yep, installing the Management Suite on a Win2k3 box, same thing happened to me last year.  You run the setup.exe "wrapper" for the suite, it checks to ensure you have all the pre-reqs installed, once you click Install the MSIEXEC script takes over and that is when you recieve the general msixec message box.  If you type msiexec at start run, that is the box that you will see come up.

Once I changed my temp variables, I was good to go.  Not sure why our server template is changing this but I thought I would let others know if they run into this.  Last year we rebuilt the server.  The LD install seems to prefer s short temp path.

Hope that makes sense.