>I have VS 2008 installed on my Windows 7 laptop. I downloaded iso file and tried running setup.exe from that file (when I viewed it). It first extracted files to some temp folder, then went through setup and gave me this error. However, I can not view the log (clicking on the links doesn't open anything).

I always extract the ISO first. We never know with that. But, the problem is probably somewhere else.

>I had a few applications left opened when I attempted to install it.

This shouldn't be a problem.

>Did I do it the wrong way? What I'm supposed to do with this ISO file?

The best is to extract it on a directory. I use IsoBuster for that.