Symptom:

When you are installing Windows 7 or Windows Server 2008 R2 SP1, you may encounter the installatin failure with error 0x80004005 (E-FAIL).

And you can find the errors in the CBS.log, like below:

Failed. Attempted to uninstall a version of a non-driver component that is not installed, version: 0X600011db04001, component: x86_microsoft-windows-a..tigations.resources_31bf3856ad364e35_6.1.7600.16385_en-us_1992d6abf12a4412, owner: Microsoft-Windows-WindowsFoundation-LanguagePack-Package~31bf3856ad364e35~amd64~en-US~6.1.7600.16385.Windows Foundation Language Pack [HRESULT = 0x80004005 - E_FAIL]

Or

2011-02-21 18:56:58, Error CSI 000006e1 (F) Done with generic command 60 (0x0000003c); CreateProcess returned 0, CPAW returned S_OK
Process exit code 41001 (0x0000a029) resulted in success? FALSE
Process output: [l:73 [73]"Trying to install vpcnfltr .....failed. Error code: 0x8004a029. [gle=0x80004005]

Error code: 0x8004a029 is NETCFG_E_MAX_FILTER_LIMIT

Resolution:

Generally, the error is because of system corruptions.

Please follow the below steps to resolve it:

1. Run CheckSUR(KB947821).

http://support.microsoft.com/kb/947821

2. Run sfc/scannow to fix the possible errors.

3. If you find 0x8004a029 in the CBS.log, it is because you have more than 13 filter drivers installed.

Option 1
Windows 7 is hard coded to allow 14 filter drivers, but the following registry sets the limit to 8 by default. You can adjust the amount up to 14 or delete this key and it will be set to max of 14.
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Network\MaxNumFilters

Option 2
Go to HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Network\{4d36e974-e325-11ce-bfc1-08002be10318}\

Delete Something that you don't need (Export First) - You can delete for example Virtual WiFi Filter Driver

4. If you encounter this error on a MacBook, probably it is an known issue (http://discussions.info.apple.com/thread.jspa?threadID=2762246&start=0&tstart=0).

Just uninstalled the HFS+ driver, then SP1 ran from Windows Update and it installed fine.

5. The last option is to Perform an inplace upgrade of Windows

Reference:

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http://social.technet.microsoft.com/Forums/en-US/w7itproinstall/thread/2b4a26e0-ee31-4bfa-a8bc-82b0af24af1d

http://social.technet.microsoft.com/Forums/el-GR/w7itproinstall/thread/3cd82850-717d-45af-bd67-54823a9b5846

http://social.technet.microsoft.com/Forums/en/w7itproinstall/thread/2538adfa-0872-4400-8a20-12abdde248df

http://social.technet.microsoft.com/Forums/en-MY/w7itproSP/thread/b3efd2f5-3b00-41c1-89ce-f48618e29e4c

http://social.technet.microsoft.com/Forums/en-US/w7itproinstall/thread/3a2e8c69-ec05-43d9-9ae4-836630b55f82

http://answers.microsoft.com/en-us/windows/forum/windows_other-windows_update/sp1-wont-install-error-code-80004005/3c78e4fc-68ce-467d-851e-8f30f0e93bfd

http://social.technet.microsoft.com/Forums/en-US/w7itproSP/thread/971838ad-39c0-4e16-9ea2-1dcb8a885ca1

Edit: KB2530477 was published, you can reference it for more details.