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While attempting to install or upgrade MicroStation V8i (SELECTseries 3), the error code 1603 is displayed.
Installation Failed: A fatal error occurred during installation.
Error 1603 during the installation is pretty general and doesn't provide any extra value. Error=1603 is a generic Windows installer error and could mean one of a few things. It might be worth checking http://support.microsoft.com/kb/834484 for possible causes and solutions.
One possible cause is Windows is awaiting a restart following a previous software installation, recent Windows Updates for instance. Reboot to ensure any previous installations are completed and restart the Bentley installation.
How to Avoid
http://communities.bentley.com/products/microstation/w/microstation__wiki/13214.error-1603-during-install