From Windows Control Panel, Add/Remove Programs, select the uninstall option, then select the 'Repair' option.
You appear to have a bad install.
If that doesn't fix it, then you may have to provide more information... like was it ever installed before? are you administrator on your computer etc etc
What version of ArcGIS Desktop is this?
The KB article referenced provides steps that do not require you to uninstall and reinstall ArcGIS Desktop - You might want to try those first.
Error: Unable to create or open the default database
Retrieving data ...