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Geoprocessing Coverage Tools in ArcGIS 9.0 creates an INFO directory in the bin folder under the installation directory of ArcGIS. The INFO directory is not created for users that do not have write access to the bin folder.
User does not have Administrative privileges or write access to the ArcGIS bin folder.
The workaround to this problem is to start ArcCatalog or ArcMap from a shortcut rather than the 'Start > Programs' menu.