I am having this same issue and creating the C:\db_home does not work. I can use the response file with setup.exe" -silent -nowait -waitforcompletion -force -noconsole -responsefile", and it installs, but then I get a no provider error when I try to launch my application. However, if I install using an admin (not local system, because this account generates the error), it installs fine, and my app runs as expected. So, something java related is not kosha when using the local system account. I use MECM by the way, which uses the local system account for deploying apps.