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Today I lost quite some time figuring out why Google Picasa did not work correctly. Even though the latest version *was* installed already it proposed to download and install an update.
So the recommended way to fix Picasa issues is to uninstall and reinstall. Unfortunately the uninstall went fine, but it wouldn't reinstall. Even when every possible Picasa directory was (temporarily for the sake of hypothesis) removed. To no avail.
On Linux I would strace/ltrace the process in order to see what's going on. On Windows you have a Sysinternals tool named procmon.exe. It can trace similar things, like file accesses and registry manipulations. At first sight nothing seemed to be wrong, but looking closer I noticed it was successfully accessing key \HLM\SOFTWARE\Wow6432Node\Google\Picasa\Installed Version which contained the version of Google Picasa that was actually removed from the system. Weird !
After removing the whole \HLM\SOFTWARE\Wow6432Node\Google\Picasa tree, the picasa39-setup.exe installer worked correctly again and Picasa installed fine afterwards.
I hope this is useful to someone so that the time I lost is somehow not completely wasted... Sigh...