Office 2010 Setup Err- 'There was a problem setting up MS Office Starter 2010'

Please try the below provided workaround and update if the issue is getting fixed.

Workaround :

The issue is caused by incorrect value introduced into the registry at the following location:

[HKEY_USERS\S-1-5-18\Software\Microsoft\Windows\CurrentVersion\Explorer\User Shell Folders]

"AppData"

This “AppData” location should be “%USERPROFILE%\AppData\Roaming. However on the machine where this bug repro’s this value is set to: “%APPDATA%”.

This creates a sort of infinite loop and end result is CSIDL_APPDATA, and %APPDATA% are no longer defined for system account and App-V connect fails.

Here is also a KB article which addresses similar issue for current user.

http://support.microsoft.com/kb/886549