installation of package failing due to system account

Hi All
I am a bit puzzled but hopefully someone can help me understand why certain packages are failing to install on Windows 7.    According to our packagers they have come ?across some roadblocks installing applications that will no install under the system account.  ConfigMgr gives the option to specify a user account under which is used to install vs the logged in users or system account.  Since they locked down Win 7 (and not sure what is locked), they cannot specify to install as the logged in users as it will result in a falure dur to the lack of admin rights.  The app will not installas the system account either because a lot of the default environments variables sucks as %userprofile% and the rest of hte Win7 system paths.  So as a workaround they want to use a generic admin account.  I am not sure if this will solve the problem they are experiencing if the local system account cannot even install the app.  Has anyone came across this before?  
 
The package they are testing with has the Run Mode under the Environment tab set on the Program to "Run with administrative rights" and the box checked to "Allow users to interact with this program" which mean it is running with the Local System Accounts credentials.