Background:

Installing Exchange 2007 SP1 on a Client Access Server gives the error "A failure occurred while trying to update metabase properties. The system cannot find the path specified."

Error:

Event Type: Error
Event Source: MSExchangeSetup
Event Category: Microsoft Exchange Setup
Event ID: 1002
Description:
Exchange Server component Client Access Role failed.
Error: Error:
A failure occurred while trying to update metabase properties.
The system cannot find the path specified.

Further, the Exchange 2007 SP1 log contained:
[2] [WARNING] IIS://<fqdn>/W3SVC/1/ROOT/EWS was not found. Please make sure you have typed it correctly.

Cause:

Note: The SP1 log is located at <system drive>:\ExchangeSetupLogs\ExchangeSetup.log

1) Ensure there are no orphaned virtual directories in the Exchange metabase, as per http://technet.microsoft.com/en-us/library/aa998589.aspx.

2) Ensure all the necessary CAS virtual directories are present.  Browse the IIS metabase using the IIS Resource Kit Tool, creatively named "Metabase Explorer".  http://support.microsoft.com/kb/840671 has a download link.
The Client Access Server virtual directories are as follows:
/W3SVC/1/ROOT/Autodiscover
/W3SVC/1/ROOT/EWS
/W3SVC/1/ROOT/owa
/W3SVC/1/ROOT/Microsoft-Server-ActiveSync
/W3SVC/1/ROOT/Exchange
/W3SVC/1/ROOT/ExchWeb
/W3SVC/1/ROOT/Public
( as per http://technet.microsoft.com/en-us/library/bb201672.aspx )

3) For directories which are not present in IIS Manager and/or missing from the IIS metabase, remove the Exchange directory, and recreate it.
For example, in the case of my error, I did a "Get-WebServicesDirectory | fl" which revealed the /ROOT/EWS entry - with the missing IIS metabase entry.  Thus, I removed the EWS directory using the Remove-WebServicesDirectory cmdlet ( http://technet.microsoft.com/en-us/library/bb124231.aspx ) and recreated it using the New-WebServicesDirectory cmdlet ( http://technet.microsoft.com/en-us/library/bb125176.aspx .)

You can check all the access directories: (via Exchange Shell)
Get-WebServicesDirectory | fl
Get-OabVirtualdirectory | fl
Get-ClientAccessServer | fl
Get-OabVirtualdirectory | fl
and look for any directory that is missing.

4) Reattempt installation.  Pull the log as necessary and keep Googling error messages, or try to understand the errors. =)

5) Verify Exchange installation - http://technet.microsoft.com/en-us/library/bb125254.aspx

6) Since we messed with them, make sure the web services are functioning: Test-OutlookWebServices -identity administrator | ft * -AutoSize -Wrap