I am unsure why you are having that (is another user also logged in), but it may be best to uninstall the current version, reboot and then install the new one.  If it is just another user logged in then you could just log them out and do the upgrade install as normal.

Try going to c:\program files(x86)\stardock\start8 and seeing if any files still exist such as start8_32.dll.  If so rename these files to something else.

Then reboot and then try reinstalling.

What antivirus product do you use?  I am wondering if it is interfering with the install somehow.

The only other thing I can suggest is clearing your temp directory if the problem is in fact reading from there rather than writing to the new location.

The usual OS disk cleanup tool (right click on a drive in explorer, pick properties, then disk cleanup on the general tab) should have an option to do this.

If this still does not help I suggest contacting support@stardock.com so they can obtain more information and see if they can troubleshoot it further for you.

Oh and I assume you have tried redownloading the installer file in case it was somehow corrupted.