The 0035 error means that the backup component is failing to install.
See this post for the KB article to troubleshoot install problems - http://forums.microsoft.com/WindowsOneCare/ShowPost.aspx?PostID=1588602&SiteID=2
If nothing in that helps resolve the problem, please contact support:
How to reach support (FAQ) - http://forums.microsoft.com/WindowsOneCare/ShowPost.aspx?PostID=2421771&SiteID=2
-steve