@Gigi: If you still have Windows Live Essentials in Control Panel => Program and Features, try a repair instead of install. There's might be a way to do a repair using the downloaded .msi / .msu but I do not know the option needed (or if you even can do that)
Other things to try if you haven't already (ignore refs to other WLE components)
Quote: Originally Posted by Nicholas Li
Windows Live Messenger/Essentials error on installation
1. Check the Background Intelligent Transfer Service:
1) Click Start, type services.msc in the Search Bar and press ENTER.
2) Navigate to Background Intelligent Transfer Service.
3) If it is stopped, please start it; if it is started, please stop and restart it. Then, check if it works.
2. Reset Winsock
1) Run “netsh winsock reset” (without quotations) in an elevated Command Prompt, and press Enter.
2) Restart the computer.
After the steps above, please reinstall the LiveMessenger/Essentials and see if it works.
Hope this helps. Thanks.
Nicholas Li - MSFT
There are a few solved related threads - they reference firewall, AV, and C runtime libraries. One last thing - make sure you've run Windows Update and have applied all critical and recommend updates, since some of the related posts mention .Net as well.
As always, good luck.