Rick, I haven't seen anyone else say what you're saying when they have a clean Windows 7 install that doesn't already have LiveUpdate installed.
As early as August 12, Symantec employees were telling people to install unmanaged from the CD and then drop the sylink file to become managed:
https://www-secure.symantec.com/connect/forums/sep-client-wont-install
The other alternative is what I listed above: install LiveUpdate first (and make sure you install LU v3.3) and then do the SEP install. That is all over the postings since RU5 was released and continues through to today.
On Richv's November 2 posting
https://www-secure.symantec.com/connect/idea/endpoint-protection-1105-managed-package-wont-install-windows-7-pro-x64 we were told Symantec acknowleged the install bug and was going to release a fix by the first week of December. If that is not the case, someone please let me know so I can quit holding my breath.
BTW, Richv described the problem
extremely well. I've been telling everyone here that a solution is coming soon, but I've been telling them that for months about a solution for Snow Leopard as well.
Perhaps all of us who have posted discussions about this issue (bug) should file a Case report like Richv did and then we'll see a resolution.