I'm pretty sure that there is an unarc.dll failure.
- Because this happens if an incorrect unarc.dll library is loaded. which you can replace but if the conversion works on other computers then it's not it.
- Unarc.dll or other programs which are involved in unpacking like precomp, srep and isdone maybe unable to start for the following reasons, it can be be detected by an anti-virus which is false.
- precomp requires half of computers cpu performance so make sure that all other programs are closed which are using cpu a lot.
- srep requires at least 512mb memory with tweaking it's decompressing and compression memory so make sure you got enough.
- CI and CIU or any other Inno Setup Advanced installer requires an additional memory of 200mb.
I think having 1GB RAM may be the problem. because Inno Requires about 200megs, and srep requires 512MB and loading operating system is another story.