Not all packages support being installed as the local system account. Try setting your batch file package to run as the current user instead.
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I've tried this logged in as the Administrator and the batch file copies to the machine but the package fails.
Paul, lets try it this way.
On the core server, make sure that all of the install files are located together, for example in \\core server\ldlogon\packages\sonic
The batch file and the setup.exe need to be in the same directory.
In the batch file take out the variable and the @echo command, and change it so you just call the setup file.
setup.exe /S (or whatever switches you are using)
Then add the "sonic" folder to the distribution package as additional files. It will prompt you and ask if you want to include everything, say yes.
Save the package, and then right click on it and reset the package hash.
Try pushing that out, and see what happens.