Thanks all for following thru and solving. Figured that this would be solved with the GR of Exchange 2007, but when the error still appeared, I came back here to check!
Charles - your solution worked for me, and I just wanted to mention that a good test before installing is to make sure that the BE Environment Check passes the "Enable Short File Name" check. When it shows up as a "warning" you can't bounce out and do the reg hack, and then continue the install. The way it worked for me was to delete the Symantec folder in Docs&Settings (as you suggest), perform the registry change, and then re-boot the server. When you perform BE setup again, the Env. Check should show a green check next to the Short File name option, and the install should go thru. I guess it pays to be thorough!
Thanks again! FIXED!