Just created a custom action with my package to run a batch file with the cacls.exe command.
It looks like this is causing the interactive services popup at this point. I'm thinking because the cmd box is poping up thats classed as interacting with the users desktop and due to the system account being unable to do so in windows 7 this is causing my install to lock up.
Has anyone had a similar issue and found a way round this? Any solution needs to be something I can set in the package or custom action as the application needs to go out to 100+ machines.