If a previous version of SQL is installed, and the account you are using does not have permission on the registry keys that store the previous versions configuration, you will receive the subject error.
Use Regedt32 to check/set the permissions on the keys:
1. Select the key in the left hand pane, to highlight it.
2. Use the Security / Permission menu.
The keys to check are:
HKEY_LOCAL_MACHINE\Software\Microsoft\MSSQLServer
HKEY_LOCAL_MACHINE\Software\Microsoft\MSSQLServer\MSSQLServer
The local Administrators group should have Full Control of these keys and sub-keys. If it doesn't, grant Full Control.
Reinstall SQL 7.0.
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