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This error often pops up while installing SQL Server Express / Full edition on machine.

Fix:

• Right Click the folder (say, C:\Sql2005) in which you wish to install SQL Server.
• In Tab ‘General’, click on ‘Advanced’
• Uncheck ‘Compress contents to save disk space’
• Uncheck ‘Encrypt contents to secure data’

and try installing. If this does not work, please log in the comment.

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