When installing Visual Studio 2005 Service Pack 1, users may see an error that reads,

Error 1718.File D:WINDOWSInstaller50baad.msp was rejected by digital signature policy.

I’ve published instructions to work around this issue using either the Management Console snap-in or the registry, the latter including a sample batch script to automate VS 2005 SP1 installation. This was also reflected in KB925336, referenced both from the SP1 download page and in the modified error dialog if this problem were encountered while installing SP1.

Today a hotfix was published on the Download Center to fix the underlying issue, that Windows XP and Windows Server 2003 attempt to read in the entire file to generate a hash over it. Despite how much physical memory the machine has, this problem can happen if not enough contiguous memory is available. High heap fragmentation prevents this.

This hotfix is only for Windows Server 2003 because we have not witnessed nor been informed of this problem occurring on Windows XP. If you encounter this problem, it is recommended that you free up additional disk space using the Disk Clean utility, and remove orphaned patches. Install this hotfix, reboot the machine, and reinstall VS2005SP1. The fix to advapi32.dll should prevent this type of problem from happening again.

• Download the Update for Windows Server 2003 (KB925336) package now
• Download the Update for Windows Server 2003, x64 Edition (KB925336) package now
• Download the Update for Windows Server 2003 for Itanium-based Systems (KB925336) package now

Remember, you can expedite installation of SP1 by silently installing the patch and disabling the baseline cache while doing so, although disabling the baseline cache will cause prompts for source when you uninstall the patch.