Well, as an x-MSCE, I'm fully aware about NT/XPs permissions... they are just as not fun in UNIX-based systems either. That's why I hate XP Home cause it tries to hide too much from you. Both of the users are Admins, so I don't really see the problem (especially since I don't even know what directory the MC installer was trying to "create", since the program was already installed).
I would move that machine to XP Pro, but don't really need to nor pay even more MS tax for an already-depreciated OS (and no way Vista is going on a prod-box).
I should probably change this user that is normally logged in running MC and my home automation and such to a limited user anywho.
Just FYI... my home server just got moved to a new machine with XP a few weeks ago. Up until then, it had been running Win 2000 with never a single crash or problem for many years. When it comes to home automation (I include MC in that), if it ain't broke, definately do not fix it. I've learned more and more to treat that box the same as we would a production server at work.