We had this same problem, and following the instructions in the readme
didn't solve it.  If those instructions don't help you, you might try
this which I found in the archives.  It did the trick for us.

-------------------
You need to run the file called "instmsiw.exe" that's within the
You need to run the file called "instmsiw.exe" that's within the
directory
 of the TSM install files.  It's going to update some files on the
system
 and ask to reboot the system.  Answer "Yes" to reboot the system. 
After it
 rebooted run this file again.  It will once again update some files. 
After
 you ran this file a second time you can then run setup.exe again.

 Important: If you ever come across a message where you can choose
"ignore"
 as an option do so otherwise it's just going to kick you out.

 This works, I promise.  I had exactly the same problem but after
thinking a
 while I realized that there had to be a problem with Window's
installer.  I
 then started playing and came across this solution.

 Good luck.

 Jacques Butcher.


Karel Bos wrote:
> 
> If I remember it correctly the answer to this question is in the readme file
> which comes with the client. You have to edit te setup.ini and change a
> parameter.
> 
> -----Oorspronkelijk bericht-----
> Van: Tomá¹ Hrouda [mailto:throuda AT HTD DOT CZ]
> Verzonden: donderdag 15 november 2001 15:40
> Aan: ADSM-L AT VM.MARIST DOT EDU
> Onderwerp: NT Terminal Server Client
> 
> Hi all,
> 
> I have trouble to install TSM client 4.2 on NT 4.0 (Terminal Server
> Edition), SP6 . During instalation process, exactly on its start (before
> copying files) following error message appears and installation crash:
> 
> 1603: General Windows Installer engine error.
> Increase Disk space requirement in Setup.ini and try again.
> 
> There is about 30GB free space on the target disk (C:). Any idea?
> 
> Many thanks
> 
> Toma9 Hrouda
> Storage Specialist
> HTD s.r.o. Praha
> tel. +420 (2) 6791 3157
> fax. +420 (2) 6791 3162
> throuda AT htd DOT cz