Have you checked your Avid account to see if you have an 8.0.3 full installer in there that you can download?
Did you DISABLE UAC?
Are you installing from a DVD?
Did you wipe the disc down with a clean cloth? (dont scratch it)
I've never seen the "Feature Transfer Error"
Have you tried updating the drivers for your DVD drive from the manufactures website?
Have you tried copying the whole DVD to an Image or just drag the contents of the DVD to the desktop and run from there.
Another thing to try it before you install, right click the installer, go to Compatibility and choose Windows XP Sp2,3 or Vista Sp2.
And be sure to run with Run As Administrator, dont just double click, Right click and choose Run as Admin.
Before you try to install again, make sure everything Digidesign related is Uninstalled.
You may even want to run a registry cleaner first like Ccleaner to clear the registry.
I've installed LE8 on Windows 7 before and didn't have a problem, you just have to Run As Admin, and use a Compatibility Mode, I don't remember IE8 being a problem, but if it is, uninstall it, and install IE7, then after you get LE8.0.5 installed, reinstall IE8, preferably IE9 since there are security holes in IE8, IE7, IE6 and lower.
I just remembered I made a video about this over 2 years ago, maybe this will help?
http://vimeo.com/7355341