Some references to resolve the issue on SCCM 2007 , in which installation on MP is failing :
http://blogs.technet.com/b/configurationmgr/archive/2010/10/26/error-the-webdav-server-extension-is-either-not-installed-or-not-configured-properly-in-configuration-manager-2007.aspx
http://technet.microsoft.com/en-us/library/cc431377.aspx
http://blogs.technet.com/b/meacoex/archive/2011/08/27/configure-webdav-for-sccm-2007-using-appcmd-and-powershell.aspx
http://blogs.technet.com/b/configurationmgr/archive/2010/08/26/solution-system-center-configuration-manager-2007-prerequisites-checker-reports-webdav-settings-are-incorrect.aspx
http://support2.microsoft.com/kb/2378924