You can only be installing one thing at a time - the MSI subsystem will not allow two installs simultaneously.
If a failed install has caused msiexec to hang, or a Windows Update is in progress, another attempt to install something will fail, though I wouldn't have expected the message you saw about the server being offline.
Is the process msiexec.exe running?
If it's not a transient condition, try a reboot to clear up the problem.
-Noel