Same issue here!

Operating system: Windows XP SP3
Browser: Mozilla Firefox 3.6.13

PLATFORM VERSION INFO
        Windows                         : 5.1.2600.196608 (Win32NT)
        Common Language Runtime         : 4.0.30319.1
        System.Deployment.dll           : 4.0.30319.1 (RTMRel.030319-0100)
        clr.dll                         : 4.0.30319.1 (RTMRel.030319-0100)
        dfdll.dll                       : 4.0.30319.1 (RTMRel.030319-0100)
        dfshim.dll                      : 4.0.31106.0 (Main.031106-0000)

SOURCES
        Deployment url                  : 
file:///D:/GoogleInstaller_en.application

IDENTITIES
        Deployment Identity             : Google Installer.app, 
Version=1.2.183.39,
Culture=neutral, PublicKeyToken=f84b370c827b5c7a,
processorArchitecture=x86

APPLICATION SUMMARY
        * Online only application.
        * Trust url parameter is set.
ERROR SUMMARY
        Below is a summary of the errors, details of these errors are listed
later in the log.
        * Activation of D:\GoogleInstaller_en.application resulted in
exception. Following failure messages were detected:
                + Deployment and application do not have matching security 
zones.

COMPONENT STORE TRANSACTION FAILURE SUMMARY
        No transaction error was detected.

WARNINGS
        There were no warnings during this operation.

OPERATION PROGRESS STATUS
        * [01.03.2011 02:27:44] : Activation of D:
\GoogleInstaller_en.application has started.
        * [01.03.2011 02:27:49] : Processing of deployment manifest has
successfully completed.
        * [01.03.2011 02:27:49] : Installation of the application has
started.

ERROR DETAILS
        Following errors were detected during this operation.
        * [01.03.2011 02:27:49]
System.Deployment.Application.InvalidDeploymentException (Zone)
                - Deployment and application do not have matching security 
zones.
                - Source: System.Deployment
                - Stack trace:
                        at
System.Deployment.Application.DownloadManager.DownloadApplicationManifest(AssemblyManifest
deploymentManifest, String targetDir, Uri deploymentUri,
IDownloadNotification notification, DownloadOptions options, Uri&
appSourceUri, String& appManifestPath)
                        at
System.Deployment.Application.ApplicationActivator.DownloadApplication(SubscriptionState
subState, ActivationDescription actDesc, Int64 transactionId,
TempDirectory& downloadTemp)
                        at
System.Deployment.Application.ApplicationActivator.InstallApplication(SubscriptionState&
subState, ActivationDescription actDesc)
                        at
System.Deployment.Application.ApplicationActivator.PerformDeploymentActivation(Uri
activationUri, Boolean isShortcut, String textualSubId, String
deploymentProviderUrlFromExtension, BrowserSettings browserSettings,
String& errorPageUrl)
                        at
System.Deployment.Application.ApplicationActivator.ActivateDeploymentWorker(Object
state)

COMPONENT STORE TRANSACTION DETAILS
        No transaction information is available.

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