There seems to be a problem writing certain values to the registry of your PC. If you have any spyware installed it maybe stopping the online installation of ie7. See if you can disable it, re-boot and try again.
If this doesn't work, try re-booting your computer in 'safe mode with networking' (allows you to still connect to the internet) and logon as Administrator and try again.
To reboot in safe mode you can press F8 when the computer is booting up and you should see a list of options.
Let me know how you get on.