I struggled with this for a couple days and finally found the solution. The default <SMS_site name> share doesn't have read permissions for Authenticated Users, Everyone, or some other entity so domain computers can access the SCCM installer.
Therefore, I wanted to share this tidbit of information and the error messages you can expect to see in the Event Log if you have this issue.
Log Name: System
Source: Service Control Manager
Date: 7/16/2013 3:04:00 PM
Event ID: 7036
Task Category: None
Level: Information
Keywords: Classic
User: N/A
Computer: WIN-8UTJAJ32RPC.contoso.com
Description:
The Windows Installer service entered the running state.
Log Name: System
Source: Application Management Group Policy
Date: 7/16/2013 3:04:06 PM
Event ID: 102
Task Category: None
Level: Error
Keywords: Classic
User: SYSTEM
Computer: WIN-8UTJAJ32RPC.contoso.com
Description:
The install of application ConfigMgr Client Setup Bootstrap from policy SCCM Agent Installl failed. The error was : %%1603
Log Name: System
Source: Application Management Group Policy
Date: 7/16/2013 3:04:06 PM
Event ID: 108
Task Category: None
Level: Error
Keywords: Classic
User: SYSTEM
Computer: WIN-8UTJAJ32RPC.contoso.com
Description:
Failed to apply changes to software installation settings. Software changes could not be applied. A previous log entry with details should exist. The error was : %%1603
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You may also see the following depending upon your GPO setup:
Log Name: System
Source: Application Management Group Policy
Date: 7/17/2013 9:14:30 AM
Event ID: 101
Task Category: None
Level: Warning
Keywords: Classic
User: SYSTEM
Computer: WIN-8UTJAJ32RPC.contoso.com
Description:
The assignment of application ConfigMgr Client Setup Bootstrap from policy My Customizations failed. The error was : %%1274
Log Name: System
Source: Application Management Group Policy
Date: 7/17/2013 9:14:30 AM
Event ID: 108
Task Category: None
Level: Warning
Keywords: Classic
User: SYSTEM
Computer: WIN-8UTJAJ32RPC.contoso.com
Description:
Failed to apply changes to software installation settings. The installation of software deployed through Group Policy for this user has been delayed until the next logon because the changes must be applied before the user logon. The error was :
%%1274
Log Name: System
Source: Microsoft-Windows-GroupPolicy
Date: 7/17/2013 9:14:30 AM
Event ID: 1112
Task Category: None
Level: Warning
Keywords:
User: SYSTEM
Computer: WIN-8UTJAJ32RPC.contoso.com
Description:
The Group Policy Client Side Extension Software Installation was unable to apply one or more settings because the changes must be processed before system startup or user logon. The system will wait for Group Policy processing to finish completely before the
next startup or logon for this user, and this may result in slow startup and boot performance.
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On your SCCM machine with the share, you should also see the following Security Failures in the Event Log:
Log Name: Security
Source: Microsoft-Windows-Security-Auditing
Date: 7/16/2013 3:04:02 PM
Event ID: 5145
Task Category: Detailed File Share
Level: Information
Keywords: Audit Failure
User: N/A
Computer: SCCM.contoso.com
Description:
A network share object was checked to see whether client can be granted desired access.
Subject:
Security ID: CONTOSO\WIN-8UTJAJ32RPC$
Account Name: WIN-8UTJAJ32RPC$
Account Domain: CONTOSO
Logon ID: 0x44519e
Network Information:
Object Type: File
Source Address: 192.168.2.1
Source Port: 61748
Share Information:
Share Name: \\*\SMS_CDS
Share Path: \??\C:\Program Files\Microsoft Configuration Manager
Relative Target Name: \
Access Request Information:
Access Mask: 0x100080
Accesses: SYNCHRONIZE
ReadAttributes
Access Check Results:
SYNCHRONIZE: Not granted
ReadAttributes: Not granted
