Just in case anyone is still having this issue - the lock file is located in the root directory and is a file called rebootflag
I deleted the file and can proceed with the install ( from 1.16.0.0 to 1.17.0.0 )
I had exactly the same problem! - and the above registry fix did not resolve it for me.
I have however fixed it by installing the SQL Server Compact 3.5 SP1, now it starts fine
http://www.microsoft.com/download/en/details.aspx?displaylang=en&id=5821
Good Luck.
Archie
Probably too late now!
I had a similar issue, and it turned out that I need to use the BDA version of the 4.5.0 drivers, the 4.5.1 causes my win7 x86 build all sorts of signal strength problems and resume problems that only a reboot would fix, but the 4.5.0 version runs perfectly
Good luck!