I came across this error recently where I could not continue my upgrade of Office 2003 to 2007 due to the install getting approx 75% complete and then giving the error message
Error 1335 – Cannot copy cab file PV561401.CAB. The file may be corrupt.
or something similar. I found this to be looking for an office 2003 folder so two ways to sort this.
First, if you have your old Office 2003 disk, remove the Office 2007 CD and insert the 2003 CD and click ok. This will sort it.
Secondly, if you don’t have the CD to hand, cancel the 2007 install then uninstall Office 2003 completely. Then reboot and reattempt the Office 2007 install.