Appear to have found a solution - registering MSXML6.0 fixed this problem for me (typing 'regsvr32 %windir%\system32\msxml6.dll' in the run dialog box will do it).

Credit goes to http://social.msdn.microsoft.com/Forums/en-US/vssetup/thread/13eafe4f-ff91-4d31-922a-71767c14d3b3