SQL Server 2005 SP1 Installation Hangs At Authentication Verification

After the installer has asked for authentication mode and has started verifying the authentication it simply hangs. I've let it sit there for an hour before taking the installer forcibly down but nothing seems to be happening except for two osql.exe processes showing up in the task manager.

I've tried both windows authentication and SQL server authentication but the outcome is always the same. At the same time I'm, however, able to login to the database engine and all services with management studio using both authentication modes.

The last few lines in HotFix.log are as follows:

05/09/2006 09:49:09.999 Authenticating user using Windows Authentication
05/09/2006 09:49:10.015 SQL Service MSSQLServer was previously running, ready for authentication
05/09/2006 09:49:10.218 SQL Agent Service SQLSERVERAGENT was previously running
05/09/2006 09:49:12.093 User authentication was successful

This would indicate that there's nothing wrong with the authentication but with whatever is supposed to take place after that.

There are quite a few lines in the log similar to the one below:

05/09/2006 09:47:08.438 Failed to read associated hotfix build information for the following file: C:Program FilesMicrosoft SQL ServerMSSQL.2MSSQLBinnSQLServr.exe

Redist9_Hotfix_KB913090.log seems to be the only individual log file that ends with line saying "Hotfix package launched" whereas all other logs have several lines of checks being completed successfully.

Any ideas what might be causing the installer to hang and how to fix it?