I’ve found that when you upgrade the agent for System Center Operations Manager 2007 R2 that you must have the Workstation service running. It tends to be turned off on hardened servers. You’ll know to do this if you see this error during a failed installation:
“The setup wizard was interrupted before Systems Center Operations Manager 2007 R2 Agent could be completely inst…”.
Yeah, the dialog box isn’t long enough and the text doesn’t wrap.
On the good news side, it appears that you don’t need KB957123 to deploy the IIS7 management pack to 2007 R2 agents. On the bad news side, it appears that management opens alerts if it doesn’t find a website called "Default Website". I’ve opened a call on that one but issues of that nature tend not to have fast fixes from MS. I’ve disabled the rule for the group affected.