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I discover from further testing that even with UAC disabled, .net 3.5 SP1 still fails to install as a pre-requisite in a clickonce deployment on to Vista.
However, if I enable the "super administrator" account, i.e. The Administrator and log in to the machine as The Administrator, the installation goes to completion just as it does on Windows XP.
In other words when logged in as The Administrator, the clickonce bootstrapper works fine installing .net 3.5 SP1, but not otherwise that I have found.
I tried starting IE using "Run As Administrator" before clicking on the Install button on the clickonce deployment page... that wasn't enough either.
So activating the super administrator account sometimes referred to as "The Administrator" is so far the only way I have found to get this deployment to install.net 3.5 SP1 via the clickonce bootstrapper.