There is a bug with the App-V 5.0 SP3 Sequencer that has just been release some days ago. When you try to install the MSI of a created App-V package created by the SP3 Sequencer, the installation only works when you run the MSI installation in an elevated cmd (start cmd.exe with “Run as Administrator”). If you deploy your apps with SCCM, you’re usually not affected when you run the installation by the system account.
The following error messages are shown when you install the msi without elevated cmd:

I created an mst that fixes the issue. Do the following steps to apply the fix :
- Download the mst that fixes the issue: http://www.notmyfault.ch/downloads/AppV5_SP3Fix.zip
- Extract the mst file and copy it into the same folder as your msi file
- Run the following command:
msiexec /i YourAppvPackage.msi TRANSFORMS=AppV5_SP3Fix.mst
If you want to run it unattended, add /qb as parameter. Make sure your current directory is the one that contains the msi/mst or just add the full path to your msi and mst. Don’t rename your msi, use the original name that has been created by the sequencer.
You can also permanently apply the transform (mst) to the msi with Orca.
The root cause of the issue is a changed setting in the MSI. The custom actions responsible to publish and remove the App-V package won’t run under the local system account with full privileges (no impersonation)

The mst I created changes that configuration back so that these custom actions run under the local system account with full privileges (no impersonation) as it was prior to SP3. This change is done by changing the above marked type values from 1025 to 3073.