I was getting the error with any Microsoft Installer (MSI) that I would try to install, repair, or uninstall "A network error occurred while attempting to read from the file:" on Windows 7.
It was pointing to a J: drive on my machine. It said that the MSI was being looked for in that path. I finally created the path it was looking for and put the file there and then it would tell me that the MSI file was invalid or corrupt.
I tried using the upgrade option of my Windows 7 install disk. At first it told me that I had a more current version of Windows 7 already installed, even though the setup program went out and got the latest setup files before starting to try to install. I found a DVD with Windows 7 Service Pack 1 and tried again. It still went to download updated files, but this time it succeeded. Unfortunately, when I booted windows back up it had not fix Microsoft Installer.
After becoming desperate after several days of research and assuming I was to the point of reformatting and reinstalling Windows and all of my software I decided to hack the registry. I went through and searched for every reference to j: in the registry and removed almost all of them. This did not fix the problem. All it did was cause the installer to not auto fill the path when it gave me the error.