Any of my attempts to install JRE 1.7.0.04 fail regardless of whether I try online or offline installer. I get error code 1311 ("Source file not found: C:\Documents and Settings\äöäöäöä\Application Data\Sun\Java\jre1.7.0_04\Data1.cab, verify that the file exists and you can access it"). Well, the file in question does exist and I can access it fine. I can also unpack it manually without apparent problems. The installer just can't locate it. My first suspicion is that this has something to do with nonstandard letters in the file path, though I have no way of confirming it.
I tried to reproduce this issue using the same user name as you have mentioned but that did not create any issue in the installation process.
I would recommend you to completely delete all the files from previous installation attempt and try fresh install.
Also at times it is helpful to empty recycle bin and temp files which in some cases may have prevented succuessful installation of software.