After doing some more research on the issue, I have found other users encountering the same issue we are:
http://groups.google.com/group/air-tight/browse_thread/thread/706716c29caf0254
http://www.flexdeveloper.eu/forums/adobe-air/air-swf%27s-getstatus-method-mistakenly-returns-%27available%27-when-air-is-installed/
http://forums.adobe.com/thread/435935
In the second thread, it says:
“My issue seems to be specifically related to the use of "Silent Install". My client has a distribution license for the AIR runtime and is bundling the AIR installer with their installer. When Silent Install is used to install the AIR Runtime, Adobe's air.swf reports that the runtime is not installed. This happens until the user initiates an air app, at which point air.swf is able to detect the runtime installation.””
This seems to suggest there is a bug with the Silent Installer or with the air.swf getStatus function. I tried the steps above and was able to recreate and resolve the issue. Does anyone else know of a different workaround?