http://bugs.winehq.org/show_bug.cgi?id=8945
--- Comment #31 from Jeremy White jwhite@codeweavers.com 2008-02-25 12:10:07 --- Found it!
It turns out that SHGetPathFromIDListW will eventually return the result of a wine_get_dos_file_name call, which will return the Common Files installer directory as: c:\Program Files... Note the *lower case* c:. If you hack wine_get_dos_file_name to return an upper case C instead of a lower case c, then the installer gets past the current failure.
Of course, then it comes to the next failure, which I have yet to triage :-(. We still don't even get the EULA page, but we do trigger Gecko, so we're trying...
I have a feeling that this is going to be hard to get an official patch into Wine for, as I bet this goes back and forth. I'll see if I can get Alexandre to approve a 'correct' path forward...