Here's another issue we saw during the App-V 4.5 beta that you might run across when installing the client. The resolution may seem obvious but the error can be confusing because it won't come right out and tell you that you don't have
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Read the complete post at http://blogs.technet.com/softgrid/archive/2008/12/16/the-app-v-client-installation-may-fail-if-there-s-insufficient-free-space-on-the-drive-for-the-cache.aspx