Hi... I just noticed your post
First, I am very very far from being a guru. If I was a compatibility guru, I wouldn't have had to write all that stuff down just to get myself to understand it.
I've only ever installed and tested the compatibility pack with Windows XP SP2 with Office 2003 Professional installed. I've not ever observed that error message: "Compatibility Pack for 2007 office System cannot be installed on this computer."
I will keep an eye out for the message though. I surf all kinds of Office sites, blogs, discussion groups, etc... If I see a mention of it, I'll come back and post what I found.
Sorry I couldn't help any more than that!