Currently I`m in a extreme rage mode.
Yesterday I decided to wipe my C: drive and reinstall a shiny new Windows 7, which I did. Had some expected problems with sound drivers etc., but nothing really I couldn't manage...till I decided to install the goddamn Microsoft Office. Whatever version I try installing, the setup keeps giving me the damn "Only one instance of setup may be run at a time" error message I can't goddamn get past. The problem must have been hiding in that I keep 2 partitions and formatted just one...and that I did only quick format (although it shouldn't matter). So far I have tried pretty much everything I can think of. I shut down everything I could that seemed to might be even remotely involved with the setup or MS office process in my task manager...didn't matter. I installed ccleaner and cleaned registry error (on a freshly wiped hard drive, lol)...didn't matter. I went on with doing disc cleanup and then using ccleaner again wiping the empty space on both my partitions...didn't matter. Then I consulted MS support pages ran the Fix It tool for 3 different MS office versions along with another 3rd partition tool that does forceful MS office removal....didn't matter. Then I finally decided to run through the manual removal described in the same said MS support page...didn't matter. I even goddamn ran again through the registry with search removing everything related to office, searching everything that held the keywords mentioned in support page...still motherfucking nothing.
The persistence of this problem seriously amazes me. I have just 2 things left to try. To try installing MS office 2003 version (after I tried like 6 different 2007+2010 versions) which I don't really intend to use, and a repeated format C:, which I really really really don't want to repeat (as well as I don't want to give up).

GARGHRHRHRHRH

UPDATE:
Yeah, well, 2003 installed beautifully and worked fine. I tried to install 2010 at the same time and after removing 2003 - still the same message.

UPDATE 2:
Managed to launch the setup in in safe mode and it actually ran for a while...till, as I expected, it started doing something and stopped running. Returned to normal mode and left open only services that ran during safe mode + those that I just couldn't close - still nothing. Amazing.

UPDATE 3:
Well, guess what. I took down windows again, formatted C: again (this time I even deleted the partition, to make sure), reinstalled windows and still - no effect. I give up.

FINAL UPDATE:
God! Finally resolved! What eventually worked was installing office in safe mode...well, switching my computer to clean boot mode. I will remember this method to the rest of my life.
I should give credit to info I found in this link:

Clean Boot mode
=========================
1. Click the Start Button and type "msconfig" (without quotation marks) in the Search Box and press Enter.
2. Click Continue to verify the permission.
3. Select the Services tab in the open window. Check the “Hide all Microsoft Services” option and click Disable All.
4. Switch to the Startup tab and click Disable All.
5. Click OK to save the settings and select Restart when prompted.
6. Click on the setup.exe in the installation files and try to install the Office program again.

Can we install it at this time?

Note: Temporarily disabling the Startup Group only prevents the startup programs from loading at startup. This shouldn't adversely affect the system or other programs. We can still manually run these programs later.

How to return from a Clean Boot state
---------------------------------------
1. Click the Start Button and type "msconfig" (without quotation marks) in the Search Box and press Enter.
2. On the "General" tab, click "Normal Startup - load all device drivers and services".
3. Click "OK". Click "Restart" when you are prompted to restart the computer.