While it has been a while since I needed to do installer testing, I recently researched a product that may be helpul in this task. Sandboxie strives to isolate programs from making changes to the rest of the operating system. The Sandboxie website describes it as:

Sandboxie runs your programs in an isolated space which prevents them from making permanent changes to other programs and data in your computer.

and lists as a benefit:

Windows Stays Lean: Prevent wear-and-tear in Windows by installing software into an isolated sandbox.

Sandboxie adds a third approach to installer testing. The first approach, to install over and over on the same instance, is expediant but not necessarily the most realistic. The second approach is to re-image / restore the system. When I first started, this meant using a program such as Ghost, now owned by Symantec. This approach has been supplanted using virtual machines. Virtual machines have made this process much faster.

Using Sandboxie, it is possible to have the cleanliness afforded by virtual machine or images plus the expediency of installing over and over on the same system. On a single system, multiple sandboxes could be created – one for each install test. This approach seems reasonable to me. It is still necessary to do installer testing on native system, but this can be done after many bugs our found and resolved.

Pricing is very reasonable for a commercial license. Check it out.