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I'm using Mac OS X 10.6, and I have been unable to install the latest Adobe AIR due to this error.

Exiting due to error: [ErrorEvent type="error" bubbles=false cancelable=false eventPhase=2 text="Error #2038" errorID=2038]

I looked up 2038, and it appears to be a permissions issue, but I don't know which folder it's looking to get permissions for.

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If you think it's a permissions issue, did you try using Disk Utility's "Repair Permissions" feature? – Spiff Mar 21 '11 at 6:10
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Solved this problem by following the instructions on Adobe's Troubleshooting page.

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