Write a test script with <?php phpinfo(); ?> to ensure that php stuff is setup correctly.
Pay close attention to the output of #2 when it comes to TMP and TEMP directories; Search for TEMP in that output
PHP needs to write to those directories as well; and that needs to be setup in two places:
In the php.ini file search for:
a. open_basedir --> Add the TEMP and TMP directories (if different) to this location along with your docroot. Windows paths are ‘;’ separated.
b. upload_tmp_dir --> Value of the TEMP and TMP directories
Recycle IIS and this should solve the problem. If it does not, edit install.php and add a die command to see which line it is failing on.