Hi ITfJ,
The setup for SourceSafe 2005 is done by the same team that does the setup for VisualStudio. You should try posting the question on the Visual Studio Setup forum, at
http://forums.microsoft.com/msdn/ShowForum.aspx?ForumID=26, someone there may have an idea what's wrong.
I also noticed that VS setup creates in the %TEMP% folder some files like dd_vserror80.txt, dd_vsinstall80.txt, dd_depcheck.txt, uxeventlog.txt. You should check the content of those files, perhaps some information written there will help pinpoint the culprit.
Thank you,
Alin