After several days I finally was able to update. In addition to all in my previous post I went to C:\ProgramData\Skype\ and set up the security so that my actions were allowed. Then took ownership of that folder.
I'm really confused now. Been trying to update to Skype 5.1 from 5.0. Here is what I have been through.
1.Downloaded the Skype Setup file .98 mb and ran that. Got a fatal error 1603 proceeded by error 1663. Spent a day trying to learn about that. Did not find a solution.
2. Found out that I could download a larger file "Skype SetupFull 20.1 mb. That did not work either.
3. Went to the Skype Community Forum. Would not except my email because another member was using it. Well, duh, that's me signed into my Skype account. Signed out of that account and still could not get into the forum.
5. In the meantime I restored the computer didn't fix the problems. Then I recovered an image that was made on Feb. 4. That did not help so went back to last nights image.
6. A member of Windows 7 Forum suggested the I run SPC SCANNOW and if that did not help to do a "repair install" of W7. The scan did not help. Still got the 1663 error and could not get into the Skype forum.
7. I then did a "repair install" of W7. Took ownership of the following folders all on C drive. Users, Windows, Programfiles and ProgramData.
8. Now when I run SkypeSetupFull 20.1 mb I get a box that say's "Cannot write the installation package to the disk. Be sure I have enough room on the disk".. Well, I have twice the space required. I suspect it has to do with security.
Hope somebody from Skype will get back to me.
Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic