I had very much the same problem and seemingly found the fix (in my case).
Installing and updating the TT CD went fine until I upgraded with the Home and Business download, had finished my taxes and was prompted to check and download updates during the review. Nothing but fatal error 1603 messages after that. The program wouldn't even open without trying to install updates first.
The Manual Update didn't help; running Win Systems File Checker showed there were no integrity violations (WIN was up to date); ran the program repair option in Control Panel - said it fixed TT but still no change; downloaded and ran .NET framework repair tool - said it repaired TurboTax and actually downloaded updates but again showed 1603 error messages during installation.
I planned on uninstalling/re-installing TT but decided to give it one more shot after disabling my firewall again and, low and behold, it updated and installed without any problem and opened TT again.
