Hi Russell,
That particular CLSID is associated with MSXML4 SP2 install/uninstall--10.3.1 supposedly removed any requirement for its use in instantiating File GeoDataBase structures. However ArcGIS 10.2 was still dependent on it--and the conflict could remain there. A bit dated, but have a read of Esri's KB 28553 -- "Error 1935"
Two suggestions.
1. Uninstall ArcGIS for Desktop and MSXML4 Since this was an upgrade attempt, now at this point you need to be aggressive about getting every thing Esri off of the system for another attempt. I'd suggest a uninstaller like CCleaner (run the tools mode and uninstall any Esri/ArcGIS items, followed by the registry mode), or the commercial Revo Uninstaller (you'll need the Pro if on 64-bit Windows, but a trial version should get you by) followed by a few runs of CCleaner's registry mode cleanup.
You'll also need to use the same CCleaner or Revo Uninstaller (or even Windows native "appwiz.cpl" rum from Start button) to remove the rather unnecessary MSXML4 SP2 or SP3 variant from your system. At ArcGIS 10.3.1 you no longer need it.
2. Set Windows Registry to its maximum size Since you are on a Windows 7 system, have a read of Esri KB 37477, --you can run the SFC /checknow, or not --basically here we assume memory management is not correct in Windows 7, and expand the size the Window Registry proactively.
Unfortunately for this you will need run a regedit.exe session and navigate to HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control where you'll create a new DWORD (32-bit) value name RegistrySizeLimit (or edit it if it already exists). Either way you'll be setting the HEX value to "ffffffff" without the quotes (or enter it as Decimal "4294967295").
And sorry, but you'll need to poke around in the Windows registry--anything with strings "Esri" and "ArcGIS" should probably go--you can search the registry with the Edit -> Find menu and repeat with the F3 key. You can do a quick search through first without deleting anything to get comfortable with the registry and get a sense of how much if anything got left behind. Just be cautious!
The thing about editing the registry is that it happens immediately--and there is no "undo". Right panel are individual values, left panel are hive keys, either can be deleted with a single delete key. Best to make a full backup export of the entire registry when starting--and then a separate backup from a key you are going to edit. When you exit the session the registry is written back--changes are immediate.
Post back if you get stuck.
Stuart
