Try these steps which will remove any previous Zune device instances...
1) Disconnect the Zune
2) Open a command window (as administrator if vista)
3) type set DEVMGR_SHOW_NONPRESENT_DEVICES=1
4) type start devmgmt.msc
5) When device manager opens, check View->Show hidden devices on the menu
6) Find any Zune devices (they may be gray) and uninstall them
7) Connect the Zune device and see if the driver will install
Zune Product Team
.: This posting is provided "as-is" with no warranties, and confers no rights :.