Are your sure the install is running as administrator?
It is also possible that the program, (either from an error/limitation or configuration error) is looking for an actual folder called %SystemRoot%, rather than expanding that to the location where windows is installed. Since I don't know anything about how they determine the folder, I can only guess and my best guess you be that it is looking in the registry for the value against key
Mine says REG_SZ C:\Windows\Fonts.
What does your say?
The actual / vs \ is probably a red-herring as the operating system should be able to cope with either.