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From the GAC Install help topic:
Update AssemblyFolders registry key: If a folder name is specified in this field, a registry key by that name is create/updated or removed from HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\.NETFramewor k\AssemblyFolders and its default entry set to the path of the assembly file.
Apparently that registry key does not exist on the box this is failing on.
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