I ran into an interesting problem recently while installing the Windows Phone 7 Developer Tools (download here). Upon execution of the setup, I received the following:

So naturally, the first place I went to look was on the Compatibility tab of the setup exe’s Properties. Lo and behold, here’s what I found:

I have to say, I’ve never run into that issue before. Why would the compatibility checkbox be disabled?

Digging a little deeper by heading out to the readme designated in the error window above, here’s what section 2.1.10 says:

Visual Studio Setup cannot run in program compatibility mode.  Ensure that the compatibility mode setting is not enabled system-wide or for the Visual Studio Setup application.

Just below that are some registry hacks that fixed the issue for me (you may have to reboot after changing):

Check Program Compatibility Assistant registry settings

Compatibility mode could have been set by Program Compatibility Assistant on earlier failed or canceled attempts to run Visual Studio setup.exe.

1. Click Start, and then click Run.
2. Type regedit, and then click OK.
3. Browse to each of the following keys and delete any value that refers to setup.exe in the Visual Studio install path:
• HKEY_CURRENT_USER\SOFTWARE\Microsoft\Windows NT\CurrentVersion\AppCompatFlags\Compatibility Assistant\Persisted
• HKEY_CURRENT_USER\SOFTWARE\Microsoft\Windows NT\CurrentVersion\AppCompatFlags\Layers

And there you have it. The compatibility mode checkbox will now be disabled so you can uncheck the box.