Commerce Server 2007 Service Pack 2 does not install successfully

This problem occurs because of a problem with the MSI Installer program when certain Microsoft Commerce Server 2007 Service Pack 1 (SP1) hotfixes have been previously installed.

http://support.microsoft.com/kb/954001

Also please CHECK LIST OF FIXES IN CS2007 SP1
List of the bugs that are fixed in Commerce Server 2007 Service Pack 1

Also please CHECK LIST OF FIXES IN CS2007 SP2
List of the bugs that are fixed in Commerce Server 2007 Service Pack 2

Also check following articles about Sql Server Recovery modes.
FullTextCatalog’ cannot be reused until after the next BACKUP LOG operation
SQL SERVER – Recovery Models and Selection