I got an email from a blog reader an wanted to share the solution I gave that helped.
For some reason (maybe due to updating ADT2007 to SP1), my New Features Workshop (in ADT2007) is not working. I know it uses Flash Player 9 (which also is not working on Internet Explorer, but is working on Firefox). I have downloaded and installed all the updates for IE, DirectX, Flash Player.
Here is what I suggested and uninstalling and installing Flash Player solved it.
First try to delete Temporary Internet Files and see if that helps. If that does not work uninstall the Flash Player using the instructions on this site (because it's not so obvious so you can use Control Panel>Add or Remove Programs). Restart the computer. Install the Flash Player again from the ADT 2007 CD at Install\support\Flash\Install Flash Player 8 AX.exe or install the latest available from Adobe.
It can for example affect installation of AutoCAD and the problem can be seen in the installation log file like below.
Installation started: Flash
Command = "\support\flash\Install Flash Player 8 AX.exe" /q
[Error: 1] Incorrect function.
Installation failed: Flash
[Info] Failure is ignored
[Error: 1603] Fatal error during installation.
Installation failed: AutoCAD 2007