I have had exactly the same problem and finally tracked down a solution (for me at least).
The setup file that you downloaded extracts a single MSI file that will be placed in a subdirectory in C:\WINDOWS\Downloaded Installations\
The subdirectory in my case had the name "\{5D4ABD6A-C317-4A3F-BBD9-AFFCADFB7BC2}" but I'm guessing that this may be different for you.
Running the MSI directly from this location proved 100% successful.
I think that the problem occurs if you have had (as I had) installed Converter 3.0.0 previously. This also leaves an installer in a similar directory in C:\WINDOWS\Downloaded Installations\ and I can only assume that this was causing some confusion, when trying to launch the MSI file. A further assumption is that the initial setup program is mis-reporting this because it assumes that a failure to find the MSI file can ONLY be caused by the failure to extract the MSI file and that this can only happen if there wasn't enough disk space.
Hope that this solution works for you and anyone else suffering the same problem.