Winnt32.msi is a wrapper for Winnt32.exe that allows administrators to create a GPO to assign the upgrade to computers running Windows NT and Windows 2000.
If the upgrade fails, as in for lack of disk space, correcting the problem does not reapply the policy, as it appears to have been successful.
To correct the problem, use tip 3139 » The Windows Installer CleanUp Utility, to remove the registry entries from the client, so that the policy can be reapplied.