I found that installation (upgrade) from 1.1 to 1.2 fails trying to write to (or probably overwrite) the program files C++.dll etc. This is because the dude server was still running even after it was shutdown using the client. Shutting it down from task manager was not allowed due to inadequate permissions, though I was logged on as administrator.
I had to reboot the machine into safe mode and upgrade from there.
I think the install program needs to shutdown the dude server to allow upgrades.