Neal, I'm sorry to hear that you've experienced an issue with the MSI installer.  We have been using the MSI installer exclusively for several months now at SmarterTools when installing the new versions on our production and test environments.  The exe/full installer is just a GUI wrapper around the MSI.  You stated that you had used the MSI installed on the 7008 build, which worked correctly.  What steps did you take when installing 7016 thru the installer?

Robert, I did the same thing as I've done in the past. Download the installer, double-click it and run the install. The MSI installer seemed a bit slower today, the step after viewing the path to install stalled as if the installer hung and then it proceeded only to fail with some prompt about permissions. I then downloaded the EXE and followed the same pattern and it succeeded. Again, I think the issue was something with trying to remove/replace the windows service as when I viewed it to see if it was removed after the MSI install failed, the service was disabled as if pending restart to complete the removal. No reboot was done prior to running the EXE, no reboot was prompted at completion of the EXE. I used the EXE on my secondary server running the backup gateway setup and it worked fine.  

I'm using Windows Server 2012 with all of the latest windows updates. 

Thank you, Neal, for providing this additional information. I will run several different scenarios on some test environments to see if I can replicate the issue.  Please let me know if this issue continues to persist while we investigate this.