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Setup failed while installing sub-component Exchange ActiveSync with error code 0xC0070643

In the process of set­ting up a new 2003 Exchange Server, we were con­fronted with the fol­low­ing error while installing Ser­vice Pack 2.

Setup failed while installing sub-component Exchange ActiveSync with error code 0xC0070643 (please consult the installatoin logs for a detailed description). You may cancel the installation or try the failed setup again.

Dig­ging into the instal­la­tion logs we see that the setup is fail­ing while attempt­ing to install MSXML:

[18:52:22] Calling MSXML installer with command line: "msiexec /i msxml3.msi /q reboot="ReallySuppress""
[18:52:22] Process created ... waiting (-1)
[18:52:23] Process has exited with 0x000643
[18:52:23] The command

msiexec /i msxml3.msi /q reboot="ReallySuppress"

failed, returning error code 1603 (Fatal error during installation.). -- ID:31136 -- ScCreateProcess (f:\tisp2\admin\src\libs\exsetup\hiddenw1.cxx:1821)
Error code 0XC0070643 (1603): Fatal error during installation.

The event logs sub­se­quently tells us:

Event Type: Error
Event Source: MsiInstaller
Event ID: 1013
Description:
Product: Microsoft XML Parser -- Your system has newer version of MSXML3 SP5 than the version you are attempting to install. Setup will quit.

The way we solved our issue, is as follows:

1. Get a copy of the Win­dows Installer pack­age for the ver­sion of MSXML 3 you have installed.
2. Place a copy inside Exchsrvr\bin
3. Rename the exist­ing msxml3.msi to msxml3.msi.backup
4. Make a copy of the lat­est ver­sion MSXML Win­dows Installer file and rename it to msxml3.msi. This will leave you with msxml3.msi and msxml3sp?.msi (in my case msxml3sp7.msi).
5. Click Retry on the error win­dow, and it should con­tinue as planned.

In our case we need MSXML.msi from sp1 815kb, instead of the sp2 ver­sion at 1.8 mb

Spe­cial thanks to Mexi Rob for the help on this issue.