Try running the .msi manually from C:\Program Files\Altiris\Altiris Agent\Agents\SoftwareManagement\Software Delivery and then selecting the proper GUID folder and finding the .msi within the cache folder.
If you do this, do you receive a more informative error message?
In any case, 1603 could suggest a problem with Windows Installer. Is any more information found in the Application log on the client? Have you tried to run a repair of the Windows Installer?
Has this failed on all clients, or only certain clients?