This problem tends to occur if the drive you are trying to install to is inaccessible. The description from InstallShield is as follows:

Error 1606 is thrown by the CostFinalize standard action. One purpose of CostFinalize is to verify that all target directories are writable before allowing the installation to continue. If a directory table entry has been specified but the Installer is unable to resolve the path, this error will occur. For example, if you define INSTALLDIR as "Y:\MyFolder," and the Windows Installer cannot find a Y drive on the target machine, error 1606 will be thrown. This error can also occur when illegal characters or syntax are used within the directory table.

For anyone getting this error, I would recommend making sure that you can access the drive where you are tying to install.