As I mentioned in another post, I just spoke with InstallShield support regarding the Ikernel.exe issue, and they pointed me towards a document that outlines trouble shooting steps for this problem. The InstallShield document reads:

Summary

I am getting one of the following errors during setup initialization:

Error extracting support files
Error installing Ikernel.exe (0x any number)
Access is denied
Error loading Type Library/DLL


Discussion

Setup initialization errors can be caused by a number of factors. This is a non-exhaustive list of possible resolutions:

1. Insufficient permissions on the machine. If you are using a Windows NT or a Windows 2000 machine, you need to have administrative permissions to run an InstallShield Professional 6.x setup. Make sure you have the correct permissions.

2. If you just ran an InstallShield setup, the engine takes a few seconds at the end of the installation to clean up. During this time Ikernel.exe (the engine file) is running in memory from a previous process; that is why you are not allowed to launch another setup. Waiting a few seconds and running the setup again should resolve this.

3. Check and make sure Ikernel.exe is not in memory; if it is, and no setup is running at the time, end that task.

4. Clean the temp directory.

5. Delete the Program Files\Common Files\InstallShield\Engine folder and then rerun the setup.

6. Reinstalling IE 5.x can also repair a number of corrupted/missing core windows files from your machine, so reinstalling IE 5.x and the NT service pack is also suggested.

7. Another possibility is that you do not have sufficient COM permissions. For information on how to troubleshoot this see article Q104986, INFO: Initialization Error Troubleshooting.

8. The other potential cause is a missing Stdole32.tlb file. This is a core Windows file and should exist on your machine. Make sure that you if you get this file from another machine, the machine is running the same operating system as the target machine.

9. Download and run DCom98.exe from the following site: http://www.microsoft.com/com/dcom/dcom98/download.asp


Does following any of these steps enable your install to work?