This error can occur during Direct Installation if the target computer does not have the Remote Registry Service enabled. To fix, start the Remote Registry Service on the target computer.
Also test to make sure your account has necsssary permissions to use the Remote Registry Service. This can be done by opening the Registry Editor (regedit.exe) on the Prism Server machine. From the Registry menu choose Connect Network Registry... and type in the name of the target computer. Make sure you can browse HKLM on the target machine. To fix, use an account that has permissions to HKLM on the target machine.