You could try that.
You are using the Network Service?
Is the Database getting installed?
Is the AppPool getting created?
Some of these you can check before you finish the install and the rollback occurs.
Have you verified IIS is serving webpages?
If you are using XP Home than you are using a hack to get IIS to run, not sure if that may cause some additional issues or not.
The error usually has to do with IIS and .Net.
.Net 3.0 should be fine to try as well.