Install MSI using ASMX web service

Question

I have been trying to create a asmx web service which can download & install a msi. When the web service attempts to install MSI, the MSI throws the following error -

MSI (c) (60:D8) [13:02:57:859]: Client-side and UI is none or basic: Running entire install on the server.
MSI (c) (60:D8) [13:02:57:859]: Grabbed execution mutex.
MSI (c) (60:D8) [13:02:57:875]: Failed to connect to server. Error: 0x80070005
MSI (c) (60:D8) [13:02:57:875]: Failed to connect to server.
MSI (c) (60:D8) [13:02:57:875]: MainEngineThread is returning 1601

But if I execute the same msi at command line using MSIexec or by double-clicking it installs fine. Is this a privileges issue? When I install it via command line I am logged as admin.

How can I allow my web service to install an msi? Or, is there any best practices to install a msi using a web service?

I am using IIS 7 on Win2k8