--------Possible Solution 1-------
No aceess to the below registry key
(HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\Eventlog\Security\ServiceModel 3.0.0.0)

1) Open the registry editor
   Click Start button in windows --> Run
   then enter "regedit" (without quotes). 
2) Navigate down to the node by opening 
   HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\Eventlog\Security\ServiceModel 3.0.0.0     
   each node in the hierarchy. 
3) Right click on the node (ServiceModel 3.0.0.0) and select Permissions 
   Click on Add, then enter "everyone" 
   (no quotes) on the 'Select Users, 
   Computers or Groups' dialog then 
   click OK. Give full permissions for "SYSTEM" and "ADMINISTRATORS" too
4) Back on the 'Permissions for 
   ServiceModel 3.0.0.0' dialog select 
   the user group Everyone, then make 
   sure the Full Control checkbox has a 
   tick, then click OK. Repeat the above for "SYSTEM" and "ADMINISTRATORS"
5) Run the setup for Framework 3.0 / 3.5 /
   VS2008 again

--------Possible Solution 2-------
If the above didnt work, then uninstall IIS
and again reinstall IIS. Then Run the setup for Framework 3.0 / 3.5 /
VS2008 again

--------Possible Solution 3-------
If none of the above worked, then follow
the instructions in the below links
http://msdn.microsoft.com/en-us/netframework/bb188202.aspx
http://social.msdn.microsoft.com/Forums/en-US/vssetup/thread/0376db8f-4761-4ae5-9af2-98c53216318a