Definately a problem with the CRE. See the steps below:
In the following folder, you will find a product.xml file. \Program Files\Microsoft SDKs\Windows\v7.0A\Bootstrapper\Packages\Crystal Reports 4.0\
Open the product.xml file in Notepad (or any text editor) and under the section, you will find 2 URLs that point to the 2 deployment packages. Copy each URL into your web browser and manually download the packages.
Once the packages are downloaded, copy them to the same folder as the product.xml file (see #1 above).