Hi Camero
By the time I had received your advise, the Windows installation was already blown away and reimaged to a refresh install of Windows, old logs were gone. However, I did check the C:\users\default folder permissions, it was missing Everyone and users permission. Updated the correct permissions to the default user folder, ran the installation and it went thru without any errors.
I did, took the time to re-imaged the server again (3rd time), this time - deleted the reverse DNS mapping, leaving only the forward DNS, it also installed fine. I just wanted to "prove" to the other users that reverse DNS is not required for the installation
Thanks,
-Ken