Published: August, 2006
Category: .NET Framework
Version: 3.0 (formerly WinFX)
Author & Site: MSDN 

Summary
This article explains how to silently launch, track, and cancel the .NET Framework 3.0 setup process.
The .NET Framework 3.0 is a redistributable runtime. The .NET Framework 3.0 setup may often be included as a prerequisite component in the setup of applications. To present a customized or unified setup experience for applications that require the .NET Framework 3.0, you may want to silently launch and track the .NET Framework 3.0 setup process while showing your own view of the setup progress.

Description
It was not possible to run .NET Framework in silent mode to track the progress or cancel the installation with the earlier versions. However, with .NET Framework 3.0, now developers have the ability of tracking and canceling a Silent .NET Framework 3.0 Setup Process when running on silent mode. A white paper is published on the MSDN site describing a 3rd party setup package to register a callback function which can be used to track installation progress of .NET Framework 3.0.  To enable this, the .NET Framework 3.0 setup process (which can be "watched") sends frequent progress messages to the main setup process (called the "watcher"). The watcher process may respond to any of the progress messages by using a code that indicates whether the setup should be canceled. 

More Info
Go to the White Paper for details at MSDN.
Aaron Stebner's WebLog briefly describes how is this possible.