Immediately after I press "Install Now" I receive a "Windows was unable to create a required installation folder" message, Error code 0x8007000B. I have disabled AVG. I have no idea on what directory it thinks that it cannot create.

I have run out of ideas to try. Please help!

Do you mean you get this error after a Windows "Update" not "Upgrade"? If you are getting this from Updating, this fix is here:
To resolve this problem, follow these steps:
1.Click StartStart button, type cmd in the Start Search box, and then right-click cmd in the Programs list.
2.Click Run as administrator, and then click Continue.User Access Control permission If you are prompted for an administrator password or for confirmation, type the password, or click Allow.
3.At a command prompt, type the following command, and then press ENTER:
fsutil resource setautoreset true c:\
4.Restart the computer.
5.Use Windows Update to install the latest updates.