I am having a similar problem. This is what I posted over at the TechNet forums with absolutely no response.
So I loaded up a fresh install of Windows 7 32 bit and I just tried to install Office 2007 Small Business edition. I am able to load up the install process, enter the product key, prove that I have a former edition of Office, customize the install process, and then I get this error message "Microsoft Office Small Business 2007 installation did not complete successfully. We are sorry for the inconvenience."
Any ideas? Surely Windows 7 works with Office 2007?
One thought . . . how many of you are using an upgrade version of Office 2007 vs. a full version. I am using an upgrade version. Could that be part of the problem...