This is strange and while I do have a workaround I don't quite understand
why this is happening.

We have around one hundred NAL MSI apps, some are vendor provided, others
are in house, and others are wise snapshot to MSI. Our users are users on a
locked down XPSP1/Zen65 machine. The problem is that if the machine has a
second drive or a substituted drive (Corel Painter 8 seems to want to write
to the root of C: so we subst P: for c:\temp to trick it into using the temp
directory) where they have write permissions we will get an MSI 1603 error
because for some unknown reason that app wants to install on one of those
drives rather than C:\ (which is boot and systemroot). If we add a
TARGETDIR=C:\ property to the NAL MSI app object the problem goes away. Is
this normal behavior?