This one has been an incredible pain as I’ve spent several hours on this and the web seems low on solutions.

Situation: I removed WSUS3 because I needed to recreate the database, which happens at install. The uninstall failed and could not remove WSUS. I deleted the files manually and used the MSI toolkit to remove it entirely. The WSUS3 installer then worked but failed at the very end when it reaches the step “IIS Compression”.

By reviewing the logfiles in temp, I could spot the first major error that triggered the rollback:

Error CustomActions.Dll InstallPsfsip: Failed to load dll (Error 0x8007007E: The specified module could not be found.)

Error CustomActions.Dll RemovePsfsip: Failed to load dll (Error 0x8007007E: The specified module could not be found.)

Many forums suggested to unregister psfsip.dll, reinstall SQL, clear up the registry, remove wsus certserver service, do a somersault, nothing worked for me.

Finally I found this post that explained that the problem is actually with .NET Framework that is damaged. Microsoft support recommended to use the cleanup_tool.exe utility.

So I did. I zapped all .NET Framework versions, then rebooted, then reinstalled .NET 3.5, then installed WSUS3 and it worked fine!