This releates to the error identified here http://paintdotnet.forumer.com/viewtopic.php?f=10&t=21585&p=122008 and here http://paintdotnet.forumer.com/viewtopic.php?f=10&t=22228&st=0&sk=t&sd=a.
No solution has been posted on either of those topics, but I've done some more debugging to identify the cause.
The security program that I have installed (Proventia) is blocking the install due to a "Buffer Overflow Exploit Attempt" by SetupNgen.exe. Here is the exact security log which is blocking SetupNgen.exe from completing (which results in the 1603 / 1733 error people are seeing).
Foxyshadis seems to have pulled out a debug version of Paint.Net and posted the stack trace of the exception:
System.UnauthorizedAccessException: Access is denied. (Exception from HRESULT: 0x80070005 (E_ACCESSDENIED))
at PaintDotNet.SetupNgen.SHGetFolderPathW(IntPtr hwndOwner, Int32 nFolder, IntPtr hToken, UInt32 dwFlags, IntPtr pszPath)
at PaintDotNet.SetupNgen.SHGetFolderPath(Int32 nFolder)
at PaintDotNet.SetupNgen.MainImpl(String[] args)
at PaintDotNet.SetupNgen.Main(String[] args)
The MSI log reports
The consensis is that this problem was introduced after v3.10. v3.10 does not throw this exception when installing but all subsequent versions do.