I have entered the inn of the seventh orgasm, by solving my own problem. It seems that with some programs like MS Office after installing in the admin account, you need to keep the CD in the drive, and open a user account. Then you need to launch the separate Office programs in turn, and windows installer completes its business, without failing as previously. You only need to keep the CD in the first time you run the Office programs in a user account. Other programs such as MS Publisher 2002, Photoshop do not need a CD when the respective programs are run for the first time in a user account. One other non-MS program that require a first time CD, Ive found is Paintshop Pro.
If only windows installer asked you to insert the installation CD, instead of pointing to an obscure help file in the Office 10, things would be so much more straight forward. But user friendliness is not what the evil empire is about.