Well Pete
I apologize for sending you down a blind alley. That installer
does require internet access in order to install.
I would not go on-line without AV & Firewall, so... the advice I had found above on how to install is just plain bad...
Oh... and some programs do require Normal mode as administrator to install... but since you were doing this when you first got the problem...
As for your locked file...
This character "~" is called a "tilde".
It is used in file / folder names under these kind of circumstances...
1. When an application like MSWord is used to open a file, a temp file is created where the file name substitutes "~$" for the first two characters of the file name. Other programs may have slightly different conventions, but the tilde is the common prefix.
2. When you need to abbreviate a path, such as "C:\Program Files", it may be abbreviated as "C:\Progra~1" for example. This maintains compatibility with older file structures.
For more information on the use of the tilde, see
this Microsoft Knowledgebase article, and
this one
The question remains, "What program is holding that file open?"
And the related question is why the installer would be trying to mess with it.
Since I was able to install, with my AV and Firewall running, I am running low on ideas.
I have seen cases where malware can act funny with locked files, but with active Kaspersky, and active firewall, and no other indications of malware, I see no reason at this time to chase that "rabbit trail".
I want to ask a friend to look in on our conversation and see what they think.
Don't give up on TechSpot yet. We want to get your problem solved!
added note...
Have you looked at this article, specifically on "granting full permissions to the system account"?
http://support.microsoft.com/kb/834484