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Why can't ArcGIS be installed through Citrix Metaframe or WTS?
During the first portion of the installation of ArcGIS, the system file update, temporary files are placed in the user’s TEMP directory, which are to be used following the ArcGIS prompted reboot of the system. Installing through a Citrix or WTS session creates a temporary TEMP directory that is removed following logoff or reboot, which in turn destroys the files left behind by ArcGIS.
Therefore, the installation of ArcGIS should only be performed at the server console and not through a WTS or Citrix session. In fact, it is recommended that all software installations and system updates be performed outside of a session. This can still be accomplished remotely with the use of a nonsession-based thin client, such as VNC.