Too bad the Catalyst installer is not written better.
The Catalyst installer is just a front-end for Windows Installer, which is -- I repeat -- a part of Windows. It doesn't matter how well it's written, it doesn't do a thing except for telling Windows what to install.
You can change a bit how it tries to do so, try the workaround install method. Google it or use the forum search to get details about it.
How hard would it be to spit out the reason for the fail when it is encountered.
Because error codes mean nothing to most users. If you click the "fail" link in the log you posted, you might get more info, but I'm not sure. I suggest taking a look at Event Viewer, as I mentioned previously.
The OS is fresh
Thigs I wonder about:
1. Is your OS clean (retail/oem disc, SHA checked iso) or some modified/pireated stuff?
2. Have you installed all updates before trying Catalyst? You probably should.
CPU: AMD Phenom II X4 810 @ 3250MHz | RAM: Kingmax 2x2GB DDR2 800 @ 833MHz| MoBo: MSI K9A2 CF v1.0 (BIOS: 1.D)| GPU: Asus HD 6850 1024MB (DirectCu) @ 850/1100MHz | Display: L24FHD | PSU: PC Power & Cooling Silencer 750 Quad | OS: MS Windows 7 Pro x64
CPU: Pentium 4 Northwood S478 @ 3200MHz | RAM: 1,5GB DDR 400| MoBo: Gigabyte GA-8S661FXMP-RZ | GPU: ASUS Radeon X1650 Pro 256MB | Display: Dimarson 19" CRT | PSU: Noname 400W | OS: MS Windows XP Pro