Office 2007: Setup has encountered a problem during install

I have a Dell Optiplex GX520 with 1gig of RAM and 100gig of free disk space.
The PC has Windows XP Professional and Office 2003 Professional (all service
patched and upto date). I also had Visio 2007 beta running.

When i tried to install office 2007 i was told to uninstall visio 2007 beta,
which i did. I also kept my existing version of office 2003 (except Outlook
which has to be upgraded). During install i didn't have the activation code
to hand, but i do now. However, every time i start an office 2007 application
or when i try to activate office i get an error message of:

"the setup controller has encountered a problem during install. Please
review the log files for further information."

I can then carry on and use the application, but i can't activate the
application. I have looked in the event viewer under all the options, but
there is nothing to go with this error message. I can't see any log files
under c:\program files\Microsoft office (or its sub directories). I ran
office diagnostics which told me it had fixed the setup problems (but not
what the problems were) - only except it hasn't as i still get the same
error message!

Does anyone have any suggestions?
Regards
Justin