This is a Windows Server 2008 hot issue found in the technet forum.
In Windows Server 2008, you want to install windows mail or windows media player, so you enable the desktop experience feature.
But later for somewhat reason, you disable the desktop experience feature. After that if you want to get this back, you will encounter an error:
<Error>: Attempt to install Desktop Experience failed with error code 0x8000FFFF. Catastrophic failure (Exception from HRESULT: 0x8000FFFF (E_UNEXPECTED))
This issue can be caused by windows updates: e.g. KB973540, KB968816, KB954155. After uninstalling them, desktop experience will be successfully enabled again. Then you can reinstall these updates.
The updates are for Windows Media Service. They were pushed through Windows Update when Desktop Experience is enabled and Windows Media Service is enabled. However, the updates were not removed together with Desktop Experience removal. When enabling Desktop Experience again, it will detect the files are newer, thus Desktop Experience failed to install.
Forum threads reference:
Edit: We have published a Knowledge Base article for this issue: http://support.microsoft.com/kb/2500700/en-us