My webhost (Mosso) has a system folder in trhe root the site that can't be removed or read. There's an issue with the installer where it tries to crawl all of the folders in silverstripe installation folder.
I managed to get around this (with some help on the IRC channel) by first installing in a sub-folder, then moving the installation back to root using FTP. I had to modify the .htaccess file to point to the root, but it's working fine now.
Just thought I'd post this in case someone ran into the same issue, or in the hopes that the installer might be adjusted to take this kind of situation into account ;-)
We have the same problem, and have a couple of questions..
Is it essential to use ftp when we move the files back to the root?
... and how do you modify the .htaccess file? - can you please write the code as we are not familar with it... and relativly new to this :-)