We did not test the installer on Windows 8 as it had yet to be released.
Have you tried manually installing the update using the .7z download?
This we have seen if you have tried overwriting and installing on the existing SDK installation path. Would suggest to change the path or uninstall the previous version. Also if you have changed the installation path and installed the application, you are opening the old installation startup thats causing this issue, so would suggest uninstalling all other Smart SDK and installing fresh.
Thanks vik86 and MF for the quick reply, really appreciate it. We will be following your suggestions. Especially changing the path. I'll check with the customer the result and let you know.