It seems like it is something on my machine though.
Hmmm... interesting.
You did not indicate OS version SP and build, so here is a generic.
If you are suspecting something on the machine, and something is blocking/interfering with the installation of LU;
Have you tried using the Windows System Configuration Utility; also known as MSCONFIG?
In MSCONFIG you can, from the Startup tab, choose to disable all applications and processes being called during the startup of your system.
See, if after doing this, you can install LU. If so, something installed/running is interfering with the install. If you stil cannot install LU after disabling everything at startup, you are most likely looking at an OS issue.
Have you verified your Disk? Chkdsk /X [drive_letter]
If it is an OS issue, you could also try doing a "repair" of Windows using the same disc that was used for installation. This can be problematic, as I don't know of any CDs that ship With SP3 (if applicable) in which case, you would need to slipstream the service pack into an Install CD. NLite is great for this and it's free.
If you opt to "repair", it's not the first repair option of the Bootup from the CD, from console, you want to skip over that one, and choose to install, it will detect your OS and give you another option for repair. That will return the core files to what they should be based on the CD versions.