I have faced issues while installing Microsoft CRM 2011 Outllook plugin for Windows 8 machines.
I have fixed the issues at last of investigating much.
Following steps may help someone who come into the same issue.
1. First look whether the Windows Identity Foundation is Enabled or not.
If not Enable it and install the plugin.
2. Now if Step 1 didn't resolve the issue.
then
Reason for this
failure:
Mismatched versions of SQL SERVER COMPACT
EDITION( SQLSERVER CE).
Required version of SQL SERVER COMPACT
EDITION( SQLSERVER CE) is 8082.
STEPS :
1. Uninstall Microsoft
SQL Server Compact
Edition 32 bit (and x64 bit one if it's also installed) from
Add/Remove Programs Note: SQL CE is different from SQL
server.Please
uninstall both 32 bit and 64 bit of SQL Server Compact
Edition if
exists.
2.
After un-installing SQL Server Compact
Edition 32 bit and 64 bit( if exists) -- Uninstall CRM client
for Outlook from Control Panel(
Mandatory)
3. Install CRM client.
This will also install all pre-requisites with correct versions
SQL Server Compact
Edition 32 bit and 64 bit, including SQL Server Compact
Edition.
Following snapshot below shows the right
sql server versions in Control Panel after successful installation of the CRM
client.

How to configure
after the successful installation ?
Note: Please close the
Outlook while configuration happens.
Hope this helps...
Happy Journey towards CRM 2011....................
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