Maybe it is too late for this reply, but just for information of anyone who come across this page.

i have the simliar problem which the installation hangs at the step where it says writing registry key and value of WebBrowser Package.

After trying for few days, and finally I noticed that the last line of the log (VSMsilog) have this:
MSI (s) (14:70) [22:05:10:250]: Executing op: CustomActionSchedule(Action=CA_CONFIIS4_Install.3643236F_FC70_11D3_A536_0090278A1BB8,ActionType=3154,Source=C:\Program Files\Microsoft Visual Studio .NET 2003\Crystal Reports\confiis4.exe,Target="CrystalReportWebFormViewer2" "C:\Program Files\Microsoft Visual Studio .NET 2003\Crystal Reports\Viewers\" /S,)

and it make me suspects it is realted to IIS problem. And later I go and check with my IIS it actually not started properly.

so what I do is to run the iisrest.exe at command line before the installation, and end up with a smooth installation.

here are the steps I take:
1. boot up the machine

2. disable firewall

3. disable antivirus

4. reset the IIS make sure it is running.
iisreset.exe

5. start installation