Windows 7 fails to install

When you hit a failure during a Windows 7 upgrade (and it rolls back to the original system), it would be helpful to share out and/or look at \$windows.~bt\sources\panther\setupact.log. (The setuperr.log file that you shared contains a filtered view of the full log file.) Also, you should look to see if there are any "dump files" (with extension .dmp) anywhere under the $windows.~bt\sources folder; it's possible that some device driver installed on your system caused the computer to blue-screen during the upgrade process.

Update: Loading up the attached dump file in WinDbg shows the problem to most likely lie in viahduaa.sys. A quick search on the web shows that it's some sort of audio driver, possibly distributed by VIA. My recommendation would be to first see if there's an update available for that driver (and install the update before upgrading). If that doesn't work, you might be able to see if you can forcibly uninstall the driver (and make sure it gets deleted from your system) before upgrading. Once the upgrade goes through successfully, you can worry about making sure you have the right audio drivers again.

I would like to thank the original poster and confirm, that one possible cause of the error "this version of windows could not be installed" is a bad driver. If a driver "crashes" during the install, the Windows 7 upgrade will eventually fail, Windows Vista will be rolled back and the error "this version of windows could not be installed" will appear on the screen.

I was able to track down a bad driver on my system that was causing my upgrade to fail. After uninstalling the software that used that driver, the Windows 7 install succeeded. In my case, the driver that was crashing was the klim6.sys driver which is part of the Kaspersky 2010 virus software. After uninstalling Kaspersky (and making no other changes) the install of Windows 7 succeeded. So, if you are having this problem, and you have Kaspersky 2010 installed... Then remove it and try again.

If you do not have Kaspersky installed, then use the following steps to identify the driver with the problem:

1. After the Windows 7 install fails and rolls back to vista do not reboot, open the following directory: c:\$windows.~bt\sources\
2. Search this directory for any files with an extension of .dmp
3. In my case the file was called setupmem.dmp
4. If you have a .dmp file, then you’ll need to open it with WinDBG. If you don’t have a dump file, then your problem is probably not related to a bad driver.
5. Download the WinDBG tool from: http://www.microsoft.com/whdc/devtools/debugging/default.mspx
6. You can choose to do a custom install and install just the debugging tools (not all of the redistributable packages and header files)
7. Start up WinDBG. WinDBG is a powerful, feature rich program with arcane commands, none of which you need to use to find the bad driver.
8. In WinDBG, select Open Crash Dump File and open your .dmp file.
9. In the text that flies by, you should see a file such as XXXX.SYS identified as the cause of the crash. In my case it was the file klim6.sys
10. Google or Bing for the sys file to find out what it is and how you can either update the file or remove it from your system.
11. Do so.
12. Run Windows 7 upgrade again.