Here are the logs that are generated when application fails:
01:22:47| Info| === Setup bootstrap logging started 11/20/2013 1:22:47 AM ===
01:22:47| Info| Bootstrap version: 5.0.9690.1992.
01:22:47| Info| User: SYSTEM.
01:22:47| Info| Invoked with command line: "C:\Users\Robust\Desktop\DynamicsCRM2011_5.0_Win7\Desktop\SetupClient.exe" /Q /p /l "C:\Users\Robust\Desktop\New Text Document.log" INSTALLLEVEL=2
01:22:47| Info| Running Microsoft Dynamic CRM 5 for Outlook at : C:\Users\Robust\Desktop\DynamicsCRM2011_5.0_Win7\Desktop
01:22:47| Info| System Memory: 2147016704 Bytes
01:22:47| Info| Initializing COM.
01:22:47| Info| Initialized COM.
01:22:47| Info| No pending reboot detected
01:22:47| Info| No reboot required
01:22:47| Info| Uninitializing COM.
01:22:47| Info| Uninitialized COM.
01:22:47| Info| Current OS Version: 6.1.7601
01:22:47| Info| ServicePack: Service Pack 1
01:22:47| Info| System Type: Workstation
01:22:47| Info| Suite Mask: 0x0100
01:22:47| Info| Copying installer files to local directory:
01:22:47| Info| Package: C:\Users\Robust\Desktop\DynamicsCRM2011_5.0_Win7\Desktop\Client.msi, Options: ADDLOCAL="Installer" INSTALLDIR="C:\windows\TEMP\MSCRM_{09BBC0C8-A083-4B19-BBDA-7F1E3764329E}" TARGETDIR="C:\windows\TEMP\MSCRM_{09BBC0C8-A083-4B19-BBDA-7F1E3764329E}"
ALLOWRUN=1
01:22:49| Info| Loading bootstrap library C:\windows\TEMP\MSCRM_{09BBC0C8-A083-4B19-BBDA-7F1E3764329E}\ClientSetup.dll
01:22:49| Info| Microsoft Dynamics CRM for Outlook is not currently installed.
01:22:52| Info| === Setup bootstrap logging ended 11/20/2013 1:22:52 AM ===
01:22:49| Info| Bootstrap version: 5.0.9690.1992.
01:22:49| Info| User: SYSTEM.
01:22:49| Info| Initializing COM.
01:22:49| Info| Initialized COM.
01:22:49| Info| Disk Space Available: 2462.00MB
01:22:49| Info| Current OS Version: 6.1.7601
01:22:49| Info| ServicePack: Service Pack 1
01:22:49| Info| System Type: Workstation
01:22:49| Info| Suite Mask: 0x0100
01:22:49| Info| IsIeInstalled=1
01:22:49| Info| .NET version found is 4.0.30319.0
01:22:49| Info| IsDotNetInstalled=1
01:22:49| Info| IsInstallerInstalled=1
01:22:49| Info| Windows Installer found is 5.0
01:22:49| Info| CIsVcRedistInstalled=1
01:22:49| Info| VCRedist with version 10.0.30319 is already installed
01:22:49| Info| Initializing COM.
01:22:49| Info| Initialized COM.
01:22:49| Info| Uninitializing COM.
01:22:49| Info| Uninitialized COM.
01:22:49| Info| IsDrWatsonInstalled=1
01:22:49| Info| .NET version found is 4.0.30319.0
01:22:49| Info| IsDotNetInstalled=1
01:22:49| Info| IsInstallerInstalled=1
01:22:49| Info| Windows Installer found is 5.0
01:22:49| Info| IsSqlCe32BitInstalled=0
01:22:49| Info| Get the job key value BITSLocalTempDir as C:\windows\TEMP\MSCRM_{C8F25810-657C-446D-ADA8-8C4C2B34EB6C} from the registry.
01:22:49| Info| Checking whether installer SSCERuntime*-x86.msi is locally available
01:22:49| Info| Local package for Microsoft SQL Server Compact 3.5 Service Pack 2 not found
01:22:49| Info| Failed to find Microsoft SQL Server Compact 3.5 SP1 setup package sqlceSCERuntime.msi.
01:22:49| Info| FWLink defined for Microsoft SQL Server Compact 3.5 Service Pack 2: 01:22:49| Info| IsSqlCe64BitInstalled=0
01:22:49| Info| Checking whether installer SSCERuntime*-x64.msi is locally available
01:22:49| Info| Local package for Microsoft SQL Server Compact 3.5 Service Pack 2 not found
01:22:49| Info| Failed to find Microsoft SQL Server Compact 3.5 SP1 setup package sqlceSCERuntime.msi.
01:22:49| Info| FWLink defined for Microsoft SQL Server Compact 3.5 Service Pack 2: 01:22:49| Info| IsReportViewerControlInstalled=0
01:22:49| Info| Checking whether installer ReportViewer.exe is locally available
01:22:49| Info| Local package for Microsoft SQL Reporting Service Report Viewer Control not found
01:22:49| Info| Failed to find Report Viewer setup package ReportViewer\ReportViewer.exe.
01:22:49| Info| FWLink defined for Microsoft SQL Reporting Service Report Viewer Control: 01:22:49| Info| IsGenevaInstalled=1
01:22:49| Info| CIsIDCRL64Installed=0
01:22:49| Info| Checking whether installer wllogin_64.msi is locally available
01:22:49| Info| Local package for Windows Live ID Sign-in Assistant not found
01:22:49| Info| Failed to find the Windows Live ID Sign-in Assistant installer.
01:22:49| Info| FWLink defined for Windows Live ID Sign-in Assistant: 01:22:49| Info| CIsMSOIDCRL64Installed=0
01:22:49| Info| Checking whether installer msoidcli*_64.msi is locally available
01:22:49| Info| Local package for Microsoft Online Services Sign-in Assistant not found
01:22:49| Info| Failed to find the Microsoft Online Services Sign-in Assistant installer.
01:22:49| Info| FWLink defined for Microsoft Online Services Sign-in Assistant: 01:22:49| Info| GetSIDOfLoggedOnUser: Starting
01:22:49| Info| GetSIDOfLoggedOnUser: before WTSQueryUserToken, session=2
01:22:49| Info| GetSIDOfLoggedOnUser: before DuplicateTokenEx
01:22:49| Info| GetSIDOfLoggedOnUser: before GetTokenInformation 1
01:22:50| Info| GetSIDOfLoggedOnUser: before GetTokenInformation 2
01:22:50| Info| GetSIDOfLoggedOnUser: before IsValidSid
01:22:50| Info| GetSIDOfLoggedOnUser: before ConvertSidToStringSid
01:22:50| Info| GetSIDOfLoggedOnUser: found user sid==S-1-5-21-782742349-858976963-320249465-1000
01:22:50| Info| GetSIDOfLoggedOnUser: succeeded
01:22:50| Info| Using the following Language Pack msi - C:\Users\Robust\Desktop\DynamicsCRM2011_5.0_Win7\Desktop\MUISetup_1033_i386.msi
01:22:50| Info| Initializing COM.
01:22:50| Info| Initialized COM.
01:22:50| Info| Initializing COM.
01:22:50| Info| Initialized COM.
01:22:50| Info| Connect to BITS.
01:22:50| Info| Find/create the local temporary directory C:\windows\TEMP\MSCRM_{C8F25810-657C-446D-ADA8-8C4C2B34EB6C}.
01:22:50| Info| Requesting download of Microsoft SQL Server Compact 3.5 Service Pack 2 installer from 01:22:50| Info| Get the job key value SSCERuntime_1033_x86.msi as {E34DEEEC-DD8B-4C2A-8779-D8BE6E10CF0C} from the registry.
01:22:50| Info| Find the job for the file SSCERuntime_1033_x86.msi.
01:22:50| Info| Set MinimumRetryDelay to: 60 seconds.
01:22:50| Info| Set NoProgressTimeout to: 60 seconds.
01:22:50| Info| Set Priority to BG_JOB_PRIORITY_FOREGROUND.
01:22:50| Info| Create the notify interface.
01:22:50|Warning| Failed to register notify interface. Error : 0x800704dd.
01:22:50| Info| Clean up the BITS downloader.
01:22:50| Info| Uninitializing COM.
01:22:50| Info| Uninitialized COM.
01:22:50| Info| Requesting download of Microsoft SQL Server Compact 3.5 Service Pack 2 installer from 01:22:50| Info| Requesting download of Microsoft SQL Server Compact 3.5 Service Pack 2 installer from 01:22:50| Info| Requesting
download of Microsoft SQL Reporting Service Report Viewer Control installer from 01:22:50| Info| Requesting download of Windows Live ID Sign-in Assistant installer from 01:22:50| Info| Requesting download of Microsoft Online Services
Sign-in Assistant installer from 01:22:51| Info| Microsoft SQL Server Compact 3.5 Service Pack 2 downloaded to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\SSCERuntime_x86-ENU[2].msi
01:22:51| Info| Prereq component installer will use downloaded installer for SSCERuntime*-x86.msi.
01:22:51| Info| Installer path for Microsoft SQL Server Compact 3.5 Service Pack 2 set to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\SSCERuntime_x86-ENU[2].msi
01:22:51| Info| Failed to find Microsoft SQL Server Compact 3.5 SP1 setup package sqlceSCERuntime.msi.
01:22:51| Info| FWLink defined for Microsoft SQL Server Compact 3.5 Service Pack 2: 01:22:51| Info| Microsoft SQL Server Compact 3.5 Service Pack 2 downloaded to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary
Internet Files\Content.IE5\SSCERuntime_x64-ENU[2].msi
01:22:51| Info| Prereq component installer will use downloaded installer for SSCERuntime*-x64.msi.
01:22:52| Info| Installer path for Microsoft SQL Server Compact 3.5 Service Pack 2 set to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\SSCERuntime_x64-ENU[2].msi
01:22:52| Info| Failed to find Microsoft SQL Server Compact 3.5 SP1 setup package sqlceSCERuntime.msi.
01:22:52| Info| FWLink defined for Microsoft SQL Server Compact 3.5 Service Pack 2: 01:22:52| Info| Microsoft SQL Reporting Service Report Viewer Control downloaded to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary
Internet Files\Content.IE5\ReportViewer[2].exe
01:22:52| Info| Prereq component installer will use downloaded installer for ReportViewer.exe.
01:22:52| Info| Installer path for Microsoft SQL Reporting Service Report Viewer Control set to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\ReportViewer[2].exe
01:22:52| Info| Failed to find Report Viewer setup package ReportViewer\ReportViewer.exe.
01:22:52| Info| FWLink defined for Microsoft SQL Reporting Service Report Viewer Control: 01:22:52| Info| Windows Live ID Sign-in Assistant downloaded to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary
Internet Files\Content.IE5\wllogin_64[1].msi
01:22:52| Info| Prereq component installer will use downloaded installer for wllogin_64.msi.
01:22:52| Info| Installer path for Windows Live ID Sign-in Assistant set to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\wllogin_64[1].msi
01:22:52| Info| Failed to find the Windows Live ID Sign-in Assistant installer.
01:22:52| Info| FWLink defined for Windows Live ID Sign-in Assistant: 01:22:52| Info| Microsoft Online Services Sign-in Assistant downloaded to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary Internet
Files\Content.IE5\msoidcli[2].msi
01:22:52| Info| Prereq component installer will use downloaded installer for msoidcli*_64.msi.
01:22:52| Info| Installer path for Microsoft Online Services Sign-in Assistant set to C:\windows\system32\config\systemprofile\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\msoidcli[2].msi
01:22:52| Info| Failed to find the Microsoft Online Services Sign-in Assistant installer.
01:22:52| Info| FWLink defined for Microsoft Online Services Sign-in Assistant: 01:22:52| Info| Querying current AutomaticUpdatesNotificationLevel
01:22:52| Info| Pausing Automatic Updates
01:22:52| Info| Automatic Updates paused
01:22:52| Error| EXCEPTION_UNKNOWN (checkbase.cpp:CCheckBase::Action:412).
01:22:52| Info| Resuming automatic updates
01:22:52| Info| Uninitializing COM.
01:22:52| Info| Uninitialized COM.
01:22:52| Info| Uninitializing COM.
01:22:52| Info| Uninitialized COM.
01:22:53| Info| Clean up the BITS downloader.
ted 11/20/2013 1:22:52 AM ===
01:22:52| Info| Bootstrap version: 5.0.9690.1992.
01:22:52| Info| User: SYSTEM.
01:22:52| Error| Installation of Microsoft Dynamics CRM for Outlook failed.
01:22:53| Info| Clean up the BITS downloader.
01:22:53| Info| Clean up the BITS downloader.
01:22:53| Info| === Setup bootstrap logging ended 11/20/2013 1:22:53 AM ===
Can you please help me out in this.