Just because, let's try one last thing, if it hasn't been done yet. If you have UAC (User Access Control) turned on (it is by default, so if you didn't change it, it is on), disable it, reboot, and then try installing Portal again at that point. http://www.petri.co.il/disable_uac_in_windows_vista.htm

Then I would suggest turning UAC back on. At that point, I would start doing the security tango, which is no fun. Running Checkdisk on all drives, look to see what else is running that could be getting in the way, etc etc. It's really no fun at that point, since, as Dmitri says, it's been tested on, and works on, Vista :(

I hate giving up, I get real stubborn trying to figure those things out *lol* If it were in front of me and not working yet, I'd still be messing with it!