How to correctly deploy Adobe Reader 9.1

I've never encountered that issue but I have deployed Acrobat Read 9.1 by GPO exactly how you describe and worked great.

I am using Windows XP PRO SP3 & IE 7 on all workstations. Not sure if you're browser has something to do with it, I didn't see the version you used.

As a thought, try it without the transform see if works (just use the MSI). Then if it does work, create basicly a blank transform And then add one option to the transform at a time until it breaks.