Umbraco "Oops...the installer can't connect to the repository!"

I was getting this error on a new Umbraco 4.11.1 installation but only when viewing the site from IIS7 and not when running the site from VS 2010. This also made my packages folder in Umbraco developer tab empty.

I had all the correct permissions on my website folder but it was still failing to display when visiting my dev URL setup in IIS.

The solution was to add the same user/group for the website folder to the C:\Windows\Temp folder. Umbraco was failing permissions trying to access this folder.

Hope this helps someone.