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IMPORTANT:

1.4.2_01 that is available on java.sun.com shows exact same behaviour when
installed.

Problem seems to go away on systems where "Microsoft Patch for Worm is removed"
                                          ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Thanks Danny Lean for uncovering this.

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1.4.2_02 EA install fails to install when installed using IFTW bundle.

Message box is shown:

"This Installation Package could not be opened. Contact the application
 vendor to verify this is a valid windows installer package"

Upon clicking OK installation stops.

This behaviour is seen and confirmed by:

JWSSE
Update release QA
Development release QA

Seen on WinNT, Win2K, WinXP.

Need a to identify the root cause fix this asap