See "Sophos Support Article ID: 3418" if you tried to install Sophos AutoUpdate component of Sophos Anti-Virus Small Business Edition (SBE).
Re-registering the Windows Installer or reinstalling it could solve this problem. See
ME315346 for details.
Reinstalling MSI Installer 2.0 helped to alleviate this problem. First, I got the error message “Service already started”. Following KB 324906 and renaming “Msisip.dll” file to “Msisip.old”, I was able to reinstall MSI Installer.
From a newsgroup post: "In my case the error occurred after the SP3 install. I installed Windows Installer 2.0 separately post SP3 and the problem was solved."