I too suddenly started receiving this message when trying to update Acrobat reader and AVG antivirus. The above solutions did not apply in my case since I only have 1 user account (Administrator) on my stand-alone PC runningWin XP service pack 3.
The problem seemed to be linked to Windows installer
“The system administrator has set policies to prevent this installation”
After much searching I found this solution that worked
start > run regedit
Browse the registry to HKLM\Software\Policies\Microsoft\Windows\Installer
Create: DisableMSI Type: REG_DWORD value = 0 (0 should allow you to install it was originally 1)
(In my case the value had been set to 2 so I changed it to 0)
I hope this helps someone too..